PEZA investment pledges drop by 22%; 2nd tax package blamed

The Philippine Economic Zone Authority (Peza) blamed the drop in investment pledges for the first two months of the year to the second comprehensive tax package, which is being pushed despite some investor concerns.

The 22-percent decline should not be a surprise to the national government, noting that the government “knows” what Peza-registered companies have been complaining about, Peza Director General Charito Plaza pointed out.

This came amid a report of the latest Peza performance, showing that investment commitments for January and February fell 21.7 percent to P20.99 billion compared to P26.81 billion in the first two months of 2017.

While Peza did not provide the latest figures for the month of February alone, the numbers suggest that the month dragged down the growth seen at the start of the year.

Petitions

“Government knows why [pledges dropped] because business chambers, foreign embassies, and industry locators sent their petitions to DOF [Department of Finance] and Congress about their opposition of TRAIN 2,” she said, referring to the second tax package.

The second tax package has just been filed in Congress under House Bill No.7458. The bill is similar to the proposal raised by the Department of Finance earlier this year.

The bill would gradually lower the corporate income tax, which ranks among the highest in the region, while rationalizing tax incentives.

This uncertainty causes woes on the part of Peza, especially since it is this investment promotion agency that has been mainly using these incentives to attract more investors.

“It’s not about Peza performance. All industries are fighting for retention of Peza incentives, which we are also fighting for,” she said in a mix of English and Filipino.

Earlier this year, Plaza said her agency would be offering a counter-proposal in response to the second package. Instead of reducing the current menu of incentives, she intends to improve it by increasing the list.

However, she has not yet disclosed the finer details of this counter-proposal.