Senate President Pro Tempore Franklin Drilon. INQUIRER FILE PHOTO / GRIG C. MONTEGRANDE
Instead of raising taxes on petroleum products, the government can raise its revenue by rationalizing fiscal incentives granted to businesses, Senate President Pro Tempore Franklin Drilon said on Thursday.
Drilon said the Department of Budget and Management, Department of Finance (DOF), the Department of Trade and Industry and the country’s economic managers should support the proposed rationalization of tax incentives “to generate additional revenues to help offset projected dip in revenues that may arise from income tax cuts.”
READ: Hike in taxes on oil products sought
“I hope that our economic managers will work closely with Congress for the long-sought Rationalization of Fiscal Incentives law instead of spending its time on a tax hike on petroleum products that will surely negatively affect our people,” he said in a statement.
“If our aim is to increase revenues, then the government should look at reviewing the various laws on the grant of tax incentives and plug the leakages in our tax system,” the senator added.
Drilon said President Rodrigo Duterte’s economic managers should try to exhaust other means to compensate for the expected foregone revenues from the proposed income tax cut, instead of raising the taxes on petroleum products.
“We should not pass the buck and shift the burden to our people,” he said.
Drilon has filed Senate Bill No. 229 seeking a review of the government’s system of granting incentives to business enterprises “in order to ensure that grant of incentives promotes social and economic benefits to Filipinos.”
READ: Oil excise tax hike to offset income tax cut
His bill, he said, would cover all incentives granted by all investment promotion agencies, such as the Board of Investments and Philippine Economic Zone Authority, to foreign and local business enterprises.
By reviewing the incentives to business enterprises, the government would be able to assess the economic impact of these incentives, the senator said.
Drilon noted that there were about 186 laws on fiscal and non-fiscal incentives and subsidies. These included income tax holidays, deductions, exemptions, credits or exclusions from the tax base.
These various and sometimes “redundant” tax incentives, he said, have resulted in billions of forgone revenues, which he said could have been utilized to fund much-needed social services.
“Through this measure, we can ensure that the foregone revenues resulting from all fiscal incentives given by the state to private entities really translate to economic benefits for Filipinos –such as additional jobs or financial opportunities, countrywide development and promotion of micro, small and medium enterprises,” Drilon said.
The senator recalled that during discussions in the previous Congress, the DOF said that the bill, if passed into law, could generate an estimated P30 billion over a period of time. CBB/rga