Industry leaders on Monday warned the earlier projection of 700,000 job losses resulting from the lifting of fiscal incentives may further go up now that world business is disrupted by the ill effects of the Covid-19 pandemic.
In a virtual briefing, business leaders whose industries operate mostly in economic zones said the country may suffer additional and heavy job losses if lawmakers choose to ignore the call to allow investors to keep their incentives.
Danilo C. Lachica, president of the Semiconductor and Electronics Industries in the Philippines Foundation Inc., reminded lawmakers the country is projected to lose more than 700,000 jobs as a result of capital flight should they pass the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) as is.
Worse, he cautioned this number could blow up now, especially that the country is dealing with the social and economic impacts of the Covid-19 pandemic.
“It may have gotten worse already. I have seen the tip of the iceberg when two semiconductor firms decided to shut down their plants due to the pandemic’s impact,” Lachica said.
“This situation of job losses is already happening even without the passage of the CREATE bill, and it may just worsen once it is legislated without changes,” he added.
Based on the July Labor Force Survey, the country’s unemployment rate swelled to 10 percent, from 5.4 percent in the same period last year. This translated to around 4.6 million jobless Filipinos at a time the economy is in recession.
John D. Forbes, senior advisor for the American Chamber of Commerce of the Philippines, also said this computation does not count missed opportunities during the three years lawmakers, finance officials and industries have been debating about CREATE bill.
“We forgot to count the missed opportunities that could have come in had we not been so busy arguing over this measure. I’m sure they number to the tens of thousands,” Forbes said.
Rey E. Untal, president and CEO of the IT and Business Process Association of the Philippines, added there is an expected demand upswing, both for jobs and orders, next year. For him, the country is in a better position to secure these capital investments if its fiscal regime is stable.
“The conversation should also shift from how much jobs are we looking at losing to what we can do as all industries would be able to increase our ability to recover and generate the job opportunities,” Untal explained.
“There are pent-up demands that will manifest themselves in second quarter of 2021. If we have an incentive regime that is favorable to investments, then we are in a position to take advantage of that pent-up demand,” he added.
The CREATE bill has long been delayed at the hands of lawmakers who cannot decide whether to follow the administration’s thrust to lift incentives granted to investors or allow economic zone firms to keep their tax perks.
The CREATE bill seeks to reduce the corporate income tax rate to 25 percent, from 30 percent, on one end. On the other, it will remove the incentives being enjoyed by investors to introduce a set of new ones.
Source: https://businessmirror.com.ph/2020/11/17/tax-perks-loss-plus-covid-to-deal-jobs-a-deadly-blow/