Business Cost NewsGovernance NewsLegislation NewsLocal Government NewsPart 4 News: General Business Environment

House committee eyes retention, expansion of tax, non-tax incentives

House committee eyes retention, expansion of tax, non-tax incentives

congress
Dakila Carlo E. Cua (Quirino), House ways and means committee chairman, said although he filed the corporate tax cut measure in March as House Bill (HB) No. 7458, it still needs to be referred by the Speaker to the body so it can conduct public hearings. — PHILIPPINE STAR/MIGUEL DE GUZMAN

THE HOUSE Committee on ways and means is looking to retain and even expand tax and non-tax incentives for those sectors with good performances and in need of a boost, its chairman said, as it is set to begin public hearings on the second package of the tax reform program.

Dakila Carlo E. Cua (Quirino), House ways and means committee chairman, said although he filed the corporate tax cut measure in March as House Bill (HB) No. 7458, it still needs to be referred by the Speaker to the body so it can conduct public hearings.

However, he said, “ine-expect natin yan this week to be referred to this committee. Once it’s referred, we will take cognizance of the bill.”

Asked what concerns the committee will raise about the new tax reform package once it begins the hearings, Mr. Cua said after a public hearing on Tuesday: “it’s not really repealing that I’m interested in.”

Kapag nakita natin (Once we see) which incentives are really working, then we don’t need to touch it. Which incentives are lacking, then we need to put more incentives, and which incentives are just a waste, ‘yung ang pwede natini-cut — ‘yung walang kwentahindi nakaka-benefit sa economy, walang masyadong naeemploy (that’s where we can cut incentives — the sectors that do not benefit the economy or provide jobs as much as the others).”

HB 7458 seeks an annual 1% cut in the corporate income tax (CIT) rate from the current 30% to 20%, which compares to the Department of Finance’s (DoF) proposed 1% cut conditional upon collecting P26 billion from streamlining incentives, provided that it does not go beyond 25%.

Both proposals, meanwhile, seek to remove incentives that do not qualify for the government’s medium-term Strategic Investment Priorities Plan and the performance contract as dictated by the Fiscal Incentives Review Board, among other parameters.

Mr. Cua said the lower rate would be competitive to other countries in the region that already enjoy a 20% rate such as Cambodia, Thailand, and Vietnam, and Singapore with a 17% CIT rate.

He said the DoF’s proposal to put a condition before cutting the corporate tax rates would lead to unpredictability in firms’ planning activities.

Yung condition, okay naman ‘yon in principle, but kung iisipin mo, hindi kasi decisive. (The conditional part is okay in principle but is not decisive.) I wanted a version na more decisive, more predictable. Kasi ang mga [concern] ng stakeholders, paano ka mag-foforecast ng iyong negosyo kung hindi mo alam kung anong tax rate next year? Pwedeng mas mababa, pwedeng hindi. (The stakeholders are asking how they can forecast for their businesses if they don’t know next year’s tax rate. It can be lower, but also the other way around.) Very unstable, very unpredictable,” Mr. Cua said.

Mr. Cua said they have been listening to stakeholders even during the adjournment of session.

“We are telling them, hindi pa naman (it’s not yet) final. Ang lahat yan, napapag-usapan. ‘Pag mayconcern kayo diyan, bigyan niyo kami ng datos, bigyan niyo kami ng aral na itong mga incentives na gusto nilang ma-preserve, ipakita sa ating committee kung nakakabuti ba talaga ito sa bayano hindi. (We will study the bill. If you have concerns, give us data or studies on the incentives you want retained. Present your case to the committee.)”

Firms registered under the Philippine Economic Zone Authority (PEZA) have been vocal in their opposition to the proposal, particularly the replacement of the current 5% tax on gross income earned to a 15% tax on net income.

Asked on PEZA’s concerns, Mr. Cua said: “We will see when we start the hearings… Nothing in the world is uncompromisable.”

The DoF hopes to implement the second tax reform package by 2019.

Meanwhile, Mr. Cua said he is open to reviewing the possibility of suspending the Tax Reform for Acceleration and Inclusion (TRAIN) law’s first package, which reduced personal income tax rates for those earning P2 million annually but imposed higher fuel, automobile, mineral and coal excise tax rates, as well as new levies on sugar-sweetened drinks and cosmetic surgery.

“I think we should be reviewing first, and not be drastic about suspending. Anytime you suspend that, that has economic implications,” he said.

Senate Bill 1798 and House Bill 7653 seeking the suspension of the excise tax increases under the TRAIN law or Republic Act No. 10963 due to elevated inflation were filed last week.

The country’s economic managers have said putting a halt to the law would compromise its key economic programs such as its infrastructure projects, free tuition in state universities and pay increases for uninformed and military personnel.

“The economic managers know what they’re doing. Let’s wait and see. But in the meantime, pag-aralan natin (let’s study the bills). If there’s merit to the proposal, why not?” Mr. Cua said. — E.J.C. Tubayan

Source: http://bworldonline.com/house-committee-eyes-retention-expansion-of-tax-non-tax-incentives/

Comment here