Business sector ‘warmish’ over 2nd package of tax reform law
The Philippine Chamber of Commerce and Industry (PCCI), the largest business chamber in the country, could not say yet if they fully support the second tax reform package of the Duterte administration.
On one hand, PCCI’s new president Alegria Limjoco said that they back the proposal’s move to lower the corporate income tax to be on par with members of the Association of Southeast Asian Nations (Asean).
On another, however, she said that PCCI would still have to get the sentiments of their member companies if they are okay with having corporate tax incentives rationalized as a tradeoff.
After passing the first package — also known as the TRAIN law — in December 2017, the government is now setting its eyes on the second in a series of tax packages. While the TRAIN law lowered the personal income tax of many Filipinos and raised consumption taxes, the second package would cut corporate income tax and rationalize tax incentives.
“In principle, we support package two [since it] proposes to lower corporate income taxes from 30 percent to 25 percent, making us [on] par with our Asean neighbors,” she told the Inquirer in a text message.
“But to make up for revenue losses, package two also proposes to streamline fiscal incentives. That is where we will need to get the sentiments of our members. And that’s the purpose of our roadshows,” she added.
To know where PCCI member companies stand on the issue, the chamber is holding a series of tax reform roadshows for the second package, partnering with the Department of Finance (DOF) and USAID’s Facilitating Public Investments Project. The roadshows would start this month up to March.
In a statement, PCCI said the tax caravan will be set in the following areas: Bacolod City (January 31), General Santos City (February 7), Subic/Clark (February 13), Cebu City (tbc) February 16), Zamboanga City (February 21), Makati City (February 28), Baguio City (March 7) and Tacloban City (March 23).
PCCI has been similarly supportive of the first package during its deliberations last year. The chamber, however, started to have reservations in the latter part of 2017, especially since lawmakers revised the package to include higher coal excise tax, which the group feared would raise the cost of doing business in the Philippines.
It remains to be seen how PCCI’s support would play out for the second package, given that lawmakers in both chambers of Congress would be crafting their own versions of the second package based on DOF’s submission.
According to PCCI, DOF Undersecretary Karl Chua and Assistant Secretary Teresita Habitan will lead the panel of speakers from government. The chair of PCCI’s taxation committee Benedicta Du-Baladad and co-chair Tomasa Lipana will be representing PCCI and the business sector.
According to DOF presentations given to industry groups, the second tax package would rationalize investment tax incentives by providing a single menu of incentives across all investment promotion agencies like Peza.
Eventually, the government intends to reduce the corporate income tax rate from 30 percent to 25 percent by 2022.
This, however, is only under the condition that the corporate income tax would drop by 2020 one percentage point for every reduction in investment tax perks equivalent to 0.15 percent of gross domestic product in 2018 or an estimated P26 billion.
