The Philippine Economic Zone Authority (Peza) has given up on asking the Department of Finance (DOF) to spare the agency from tax reform, opting instead to go directly to President Duterte.
Peza Director General Charito Plaza earlier said she would not be bullied by government officials who asked her to shut up after expressing strong reservations against the “Trabaho” bill.
She first said this in her speech at the Economic Journalists of the Philippines (Ejap) Awards Night, where she reiterated her agency’s position to maintain the existing tax system covering economic zones.
“Enough of the scolding. Enough of the bullying from other leaders of the government to keep our mouth shut,” she said, adding she was ready to speak directly to the President.
On the sidelines of the event, she told reporters that she was hoping the President would understand Peza’s concerns.
Peza, she said, was more in tune with what was happening on the ground, compared to “technocrats like [those in the] DOF” who only think of getting more taxes.
“I am asking for time to talk to the President. I still hope the President would understand especially now [when] the excise taxes provided in the TRAIN law are partly causing the rise in inflation,” she said, referring to the first tax reform package pushed by Duterte’s economic managers.
This develops as lawmakers mull over the divisive Tax Reform for Attracting Better and High-quality Opportunities (Trabaho) bill, the second tax reform package of the Duterte administration.
The bill will lower corporate income taxes in the country, while rationalizing the incentives offered to investors. The latter part is seen to hit Peza and the economic zones.
The bill was passed in the House of Representatives, even though government officials later admitted that they had yet to finish analysis on how jobs would be affected by Trabaho.
Asked to comment on this, Plaza said: “That’s why it becomes more dangerous. It would be too late to say we’re sorry. Once exporters pull out, we cannot get them back.”
Plaza is almost alone in this fight, noting how she does not have the backing of economic managers. When asked if Peza still engages with DOF, she said she had given up on talks with the finance department after realizing that their pleas fell on deaf ears.
Peza recalled how industry groups tried to reach out to DOF to air their side, back when the tax package was still a DOF proposal. This proposal was later adopted in Congress in what is now called the Trabaho bill.
The uncertainty over the fate of the tax perks in the country has been blamed for the drop in investment pledges under Peza.