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Posted on March 26, 2014 10:47:01 PM

Finance calls for new incentives laws

TAX PERKS granted to investors cost the government P144 billion or some 1.5% of the economy in 2011, the Finance department yesterday said as it urged the passage of measures promoting transparency and incentives rationalization.

The department, in a statement, said reduced income tax rates and duty exemptions also amounted to 9.3% of state expenditures and 10.6% of revenues that year based on an initial Tax Expenditures Report (TER).

Of the foregone revenues, P83 billion was said to have been lost due to duty-free imports, P15.7 billion from the preferential rate on shipments of certain goods and P45.6 billion from income tax holidays.

The department called the TER estimates “conservative,” noting that the report covers only 1,318 out of 4,581 investment promotion agency -registered firms.

“With the current tax incentives system that has been largely unaccounted and uncoordinated, the government loses billions of pesos in revenues every year…,” Finance Secretary Cesar V. Purisima said in the statement.

The department, he said, is pushing for the enactment of two laws: the Tax Incentives Management and Transparency Act (TIMTA) and the Fiscal Incentives Rationalization reform bill.

A Finance-backed version of the fiscal incentives rationalization bill — House Bill (HB) 2765 — was filed by Rep. Gabriel Luis R. Quisumbing (Cebu, 6th district) last year. It is currently pending at the committee level.

At the Senate, meanwhile, are three bills: Senate Bill (SB) 987 authored by Sen. Ralph G. Recto, SB 35 authored by Sen. Cynthia A. Villar and SB 2048 authored by Sen. Loren B. Legarda. All three have been referred to the Senate ways and means and economic affairs committees.

For the TIMTA, two bills are pending at the Senate committee level: SB 469 authored by Senator Franklin M. Drilon and Mr. Recto’s SB 1187.

“Through these twin fiscal incentives reform measures, in the long term the government will enhance the country’s fiscal capacity to continue to build on its macroeconomic fundamentals, level the playing field and improve competitiveness and investment opportunities,” Mr. Purisima claimed.

Source: http://www.bworldonline.com/content.php?section=TopStory&title=Finance-calls-for-new-incentives-laws&id=85319