DOF dismisses fear of job losses from Citira

The chief lobbyist and so-called “poster boy” of the Duterte administration’s comprehensive tax reform program on Monday challenged the foreign business lobby: prove your claim that the proposed Corporate Income Tax and Incentives Rationalization Act (Citira) will shed at least 700,000 jobs.

“Our numbers are transparent. Companies will reasonably invest at least 50 percent of their additional money from the reduction of the corporate income tax rate rate in growing their business. This will mean more jobs—a total of 1.5 million jobs actually. Moreover, the new menu of incentives for investors, as proposed in Citira, will also encourage job creation and upskilling,” Department of Finance (DOF) Undersecretary Karl Kendrick T. Chua said in a statement.

Citira will gradually reduce the income tax rate being slapped on firms to 20 percent from 30 percent at present—the highest in Asean, while also rationalizing the fiscal perks being enjoyed by investors to reduce the government’s foregone revenues.

Chua was reacting to the claims of the Joint Foreign Chambers of the Philippines (JFC), who during last week’s Senate ways and means committee hearing on Citira warned that if the existing tax incentives regime were tweaked, 121,000 direct and 582,000 indirect jobs would be lost in the first year of implementation.

“Citira destroys a highly successful incentives system that has brought in foreign investors to create significant industries that export goods and services … The DOF has been silent on the jobs that will be lost; we are not,” American Chamber of Commerce of the Philippines senior advisor John Forbes, who represented the JFC, said at last week’s hearing.

“We hear them. We have been listening to them and asking them in almost every meeting for two years now to give us more details on what kinds of jobs they are referring to, in which industries, and in which areas of the country, so we can help. Secretary (Ramon) Lopez of the Department of Trade and Industry, who chairs both Peza (Philippine Economic Zone Authority) and BOI (Board of Investments), already said that we are open to continue supporting footloose industries. So why won’t they give us more details on their claims? Their lack of transparency is a little bit suspicious; don’t you think?” Chua said.