Duterte told to make perks bill his tax-reform equalizer

December 21, 2017 at 15:00

Duterte told to make perks bill his tax-reform equalizer

Photo from The Source, CNN Philippines

Senate Minority Leader Franklin M. Drilon prodded Malacañang to certify the urgent passage of a long-awaited measure that would rationalize the fiscal incentives being given to the business sector, noting that the bill would serve as the “equalizer” in the Duterte administration’s tax-reform program.

The irony, however, was the fiscal incentives rationalization bill did not become a law during the Aquino administration, when Drilon was the Senate President.

Drilon called on President Duterte to “exercise strong political will” even as the senator noted that the administration made a company pay the unpaid airport fees of P6 billion.  “He [Duterte] was able to collect from a cigarette company P26 billion. We applauded such political will. We would like such political will being applied in order to make the taxes more equitable,” he said.

In a statement, Drilon decried the Duterte administration’s “continued inaction” on the fiscal incentives reform bill as “an affront to Filipinos who would be adversely affected” by the Palace-approved Tax Reform for Acceleration and Inclusion (TRAIN) law, under Republic Act 10963.

The senator noted foregone revenues from lowering of income-tax rates is compensated by the TRAIN by, among others, imposing steep taxes on fuel seen to trigger increase in the prices of basic commodities.

“I urge the administration and Congress to start working on rationalization of fiscal incentives granted to companies so we can make our tax system more equitable,” Drilon said.

According to him, the TRAIN law burdens the poor with higher fuel taxes. “It’s about time we review the incentives granted to companies to see if such incentives are necessary and continue to serve the purpose for which they are granted.”

Drilon deplored as “utterly unfair that the poor would have to share the burden of raising revenues for the government” under the TRAIN law, while the rich companies would continue to enjoy all forms of tax perks and tax holidays.

“That is against the basic principle of progressive taxation, which dictates that, the higher a person’s income, the higher his taxes should be. It’s about time that Congress address this inequality in our current tax system,” he said.

The senator suggested a review of the tax incentives given to companies, saying it is “long overdue.”

In filing Senate Bill 229, embodying the proposed rationalization of fiscal incentives, Drilon expects the remedial legislation to be adopted in the second tax-reform package promised by President Duterte’s economic managers. “The government should review the various laws on the grant of tax incentives and plug the leakages in our tax system.”

He pointed out the Tax Incentives Management and Transparency Act (Timta) he earlier authored had “already provided the tools for transparency in the grant and management of incentives,” adding that the “next step would be to rationalize these incentives.” The Timta requires business entities to report all the incentives that they are enjoying— allowing the government to account for the amount of foregone revenues from various incentives given.

Citing government data, Drilon further notes there are more than 186 laws on numerous fiscal and nonfiscal incentives and subsidies in the country, including income- tax holidays, deductions, exemptions, credits or exclusions from the tax base.

“According to previous estimates, the remedial measure, once enacted, could generate P30 billion in additional revenue annually,” said Drilon, whose bill will pave the way for a thorough review of the government’s system of granting incentives to business enterprises in the country to “ensure that grant of incentives promotes social and economic benefits to Filipinos.”

Drilon asserts that reviewing the grant and administration of incentives to business enterprises will enable the Duterte administration to “assess the economic impact of these incentives.” Senators belonging to the majority bloc, however, would not readily commit support for the remedial legislation rationalizing fiscal incentives.

“I will review it first,” Senate Majority Leader Vicente C. Sotto III told the BusinessMirror.

Sen. Sherwin T. Gatchalian, who chairs the Senate’s Economic Affairs Committee, also asked for time when asked if he will back passage of the measure saying in a text message that “I haven’t read that bill yet.”

Sen. Juan Edgardo M. Angara, Ways and Means Committee chairman, said members on the panel still need to review Drilon’s proposal.

“We will study the bill since I know that is a crucial component of package 2 of the tax reform alongside the lowering of corporate-income tax,” Angara said.

He, however, added that senators “must first complete the second component of the first tax-reform package, and this is the general amnesty bill.”

Source: https://businessmirror.com.ph/duterte-told-to-make-perks-bill-his-tax-reform-equalizer/

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