SHERWIN Gatchalian on Sunday called on the Department of Finance (DOF) to study the impact of the Corporate Income Tax Incentives Reform Act (CITIRA) on employment.
“Even the bill recognizes job losses. It recognizes displacement,” Gatchalian, who serves as vice chairman of the Senate Committee on Economic Affairs, said in an emailed statement.
“Mahirap ho sa amin suportahan ang isang batas kung alam naming marami ang mawawalan ng trabaho,” he explained.
He was referring to the CITIRA, or the second package of the administration’s planned comprehensive tax reform program, which seeks to reduce the corporate income tax rates to 20 percent from the current 30 percent.
It also aims to make tax perks time-bound, transparent, targeted, and performance-based for a more competitive fiscal incentives system.
Various business groups in July already warned that the CITIRA bill, formerly named the Tax Reform for Attracting Better and High-Quality Opportunities, would lead to a loss in investments and millions of jobs.
The American Chamber of Commerce of the Philippines last week also said that around 700,000 jobs will be lost, especially for those employed by industries that currently have fiscal incentives in place.
“We are very sensitive to job losses and we are very sensitive to job creation. I think everyone is striving to create jobs,” Gatchalian said Sunday.
“I want to demonstrate that to the Committee because we have to cover all of these things in order to come up with an educated decision to be able to support this bill, or to at least come up with some adjustments,” he elaborated.
For its part, the DOF defended its stand on rationalizing incentives, claiming that such tax perks are becoming less of a factor for foreign businesses investing in the country.
“Looking at the data, we will even find that these FDIs (foreign direct investments) are increasingly non-reliant on incentives. While more and more investments are coming into the country, the level of investment pledges through PEZA (Philippine Economic Zone Authority), which are pledges made with the expectation that incentives will be granted, have been going down,” said Finance undersecretary Gil Beltran.
“Furthermore, it seems that investors lately do not base their pledges on incentives given forever. In 2018, the largest amount of investment pledges came from firms registered with the Board of Investments (BOI), which does not grant incentives forever. Investment pledges with the BOI in 2018 amounted to USD1.97 billion. Those with PEZA only amounted to USD1.3 billion,” he added.
The DOF earlier this month also claimed that the reported increase in FDI pledges during the first six months of the year shows that businesses are not spooked by CITIRA.
Data released by the Philippine Statistics Authority (PSA) showed FDI pledges in the first semester grew by 111.504 percent to P95.6 billion from P45.2 billion in the same period last year.
While the PSA reported an increase in investment pledges, data released by the central bank showed a decline in actual investment flows at USD3.6 billion, reflecting a 38.8 percent drop from USD5.8 billion a year earlier.(GMA News)
