Labor eyes seat in incentives board

The labor sector wants a seat at the review board that would decide which firms would be granted tax perks, claiming that companies in economic zones have become “fortresses” for violations of workers’ rights.

This was disclosed by Luis Corral, vice president of the Associated Labor Unions-Trade Union Congress of the Philippines (ALU-TUCP), the largest labor group in the country.

He said a number of companies registered under the Philippine Economic Zone Authority (Peza) were allegedly guilty of union busting, endo, and work termination of union officers, among other violations.

These should make the government include fair worker treatment in the criteria for the granting of tax perks.

Having a seat at the Fiscal Incentives Review Board (FIRB), which reviews and approves the tax incentives that would be given to companies, would help achieve this.

“Remember, these ecozone locators are fortresses of ‘endo’ and contractualization, castles of poor safety standards, ramparts of union busters and exploiters,” he claimed.

He deferred from publicly naming the erring firms since this might lead to a backlash against the workers involved. When asked for comment, Peza Director General Charito Plaza called the accusation “unfair.”

Peza-registered firms currently enjoy tax perks such as an income tax holiday and 5-percent gross income earned (GIE) tax in lieu of all taxes, the latter essentially having no expiration date.

This comes as the government is mulling over the second comprehensive tax reform package, which would lower corporate income tax and rationalize tax perks—a timing which the labor group wanted to take advantage of.

The package has been filed as House Bill 7458, which includes a proposal to give the finance secretary, as chair of the board, the power to strip off perks from any company, upon the review and recommendation of the FIRB.

However, there is currently no labor representation in the FIRB under the proposal.

Apart from the executive secretary of the Philippines, other board members are the secretaries of trade and industry, of budget and management and the National Economic and Development Authority.

Peza’s top official called the accusation “unfair” given that “most violators are companies outside the zones.”

“That’s a general statement. We need specifics [of the violations and the violators] because our records will show Peza-registered [companies have] the lowest labor strikes and closures because of [labor-related] problems,” Plaza told the Inquirer.

“In fact, foreign [companies] are paying above the wage rates and give more benefits than required by the law,” she added.

Peza has also been vocal of its opposition of the tax package, noting that the uncertainty it has brought to the investment climate has led to the decline in investment pledges registered under the agency.