Cayetano panel endorses Citira for Senate approval
MANILA, Philippines — Senator Pia Cayetano has endorsed for plenary approval a measure that would reduce corporate income tax, and reform the fiscal incentives system in the country.
Cayetano, head of the Senate committee on ways and means, presented on the floor on Wednesday Senate Bill No. 1357 known as the Corporate Income Tax and Incentives Rationalization Act (Citira).
Under the bill, the corporate income tax (CIT) rate in the country would be reduced gradually by one percent every year—from 30 percent to 20 percent by 2030.
“We are cognizant that Philippine enterprises are the backbone of the economy and that they contribute to national development by supplying much-needed employment and livelihood. And yet, companies doing business in the Philippines are slapped with a 30 percent corporate income tax rate, the highest in the region,” Cayetano said in her sponsorship speech of the bill on Wednesday.
“To address this, we will bring down the Corporate Income Tax rate from 30% to 20% over the next 10 years.”
This, she said, should result in the creation of some 1.5 million more jobs.
Cayetano said the bill would also rationalize fiscal incentives given to firms to make these “performance-based, time-bound, targeted, and transparent.”
From 2015 to 2017, the senator said the government granted more than P1 trillion in tax incentives in the form of exemptions and tax discounts to various companies.
“In 2017 alone, the government granted billions of pesos to a select group of some 3,150 businesses. These companies pay an effective rate of 6 to 13 percent of Corporate Income Tax as opposed to other enterprises that pay the regular 30 percent Corporate Income Tax,” she said.
Cayetano though reiterated that the bill would only rationalize, and not scrap, these incentives.
“Incentives should not be given out to any corporation without the proper conditions,” she said.
“They should be performance-based and targeted, and granted in such a way that would benefit the public — by way of providing employment, boosting needed industries, and promoting the growth of less developed areas in the country,” she stressed.
At present, however, the senator noted that the special 5 percent tax on gross income earned (GIE) is granted forever without conditions “even if the firm does not contribute to the economy in terms of jobs and exports at a level commensurate to the amount of incentives given.”
“No other country gives incentives forever,” she said.
“Dear colleagues, it is time to end a regime that distributes costs to the many, and concentrates benefits to the few,” Cayetano then said.
In the proposed measure, the Philippine President may only grant incentives for a longer period of up to 40 years “for highly desirable projects, as long as they will primarily benefit the Filipino public.”
And to ensure a smoother transition, the bill also provides for sunset provisions for firms currently enjoying fiscal incentives.