MANILA – A ranking Department of Finance (DOF) official on Tuesday stressed the importance of reforming corporate income tax to attract investors that will further boost growth of the domestic economy.
During the hearing of the Ways and Means Committee of the House of Representatives Tuesday, Finance Undersecretary Karl Chua decried criticisms against Package 2 of the Comprehensive Tax Reform Program (CTRP).
He said that, for one, allegations that reform the income tax regime will scare away investors are not true.
He said investors are “looking at the Philippines as a bright spot because of our solid macroeconomic performance, the Build, Build, Build (program), and our young and dynamic labor force.”
“So we have to reform incentives to make it more modern so that we attract the right kind of incentives that will contribute to the economy. Not the incentives or the firms that have been enjoying it for 40 years and hardly contribute to the economy,” he said.
The Finance department executive said some companies have been enjoying incentives for about 40 years now to the detriment of the government.
He denounced allegations that Package 2 will kill the goose that lays the golden eggs.
“This fattened goose has been receiving incentives for up to 40 years so we merely ask those helped by the government for 40 years to help the country after 40 years of being helped,” he said.
Chua explained that in the 1970s the economy in general has nothing to offer but times have changed.
“Today we have far more to offer so what we are saying here is we rebalance to the investors, not only from band-aid tax solutions but to a more comprehensive package where we give them infrastructure, ease of going business, healthier labor force, more educated,” he said.
Chua said that once this particular tax reform is in place investors will be given a gradual phase out period but they will be given a chance to apply for incentives again.
“Those who will apply for incentives will be given even more incentives for every job they create,” he said.
Chua said uncertainties on this tax reform measure are not because of the measure per se but the length of time that it has taken Congress to give its approval.
“Investors do not want to invest until they know the final package. The uncertainty is not because of the tax rate, it’s because they don’t know what will happen. And the sooner we pass the bill, I think, the more certain there will be for the investors,” he added. (PNA)
