FEF Statement on Tax Reform for Acceleration and Inclusion Package 2

Release Date: May 2, 2018

We, the Foundation for Economic Freedom, support the rationalization of fiscal incentives under Tax Reform for Acceleration and Inclusion (TRAIN 2). We commend the major principles proposed to rationalize fiscal incentives, namely: 1) to link incentives to performance; and 2) to limit the focus of incentives to sectors that will generate economic benefits such as employment, exports, etc. In this context we support:

1. Phasing out of all existing incentives except for a subset of companies which are employment-intensive, and are likely to move to other countries without incentives;
2. Granting of new incentives outside of this small subset, which will be centralized in an Economic Development and Fiscal Incentives Review Board, where employment and contribution to economic development shall be the paramount considerations; rules for the granting of incentives should be clear, transparent, and minimizes discretion from the government bureaucracy;
3. Phasing out of incentives for redundant investment, i.e. investment will likely be done anyway even without incentives, such as for mineral exploration; and
4. Accompanying TRAIN 2 with administrative reforms that will improve the professionalism, efficiency, and accountability of taxing authorities.

We support further the retention of the 40% OSD (Optional Standard Deduction), rather than a reduction to 20%, in line with the principle of making tax compliance easy and simple. We support the reduction in the corporate income tax rate to 25% or even lower, should government finances allow it, in order to align the country’s tax rates with the rest of ASEAN.

For more information, visit www.fef.org.ph or contact:

Ranna Pintor – Senior Program Officer: (632) 453 2375, [email protected]
Mabel Almenteros – Communications Officer: (632) 453 2375, [email protected]

Source: http://www.fef.org.ph/freedom/wp-content/uploads/2014/02/FEF-Statement-on-TRAIN-Package-2.pdf