As the COVID-19 pandemic threatens the economy and jobs, companies cannot expect immediate help from the government as priority in aid are workers displaced by draconic quarantine measures.
Finance Secretary Carlos G. Dominguez III said he is opposed to giving tax breaks to companies hit by COVID-19.
The government priority, he said, was to support workers who lost jobs and protect people on the frontline of the fight against the disease.
Part of priority was “expand our capacity to deal” with COVID-19 “on a physical basis and to provide liquidity to the economy.”
“I have told the people who had come out with that proposal to do a stimulus package—that is not our priority at the moment,” Dominguez said in an interview via Google Meet on Wednesday (March 25).
Last week, 22 business groups asked the government to “adopt a fiscal stimulus program” by widening the budget deficit to nearly 5 percent of gross domestic product (GDP).
The groups asked the government to launch “maximum fiscal response” that included “funds to support businesses,” especially micro, small and medium enterprises.
The funding assistance should come when COVID-19 is already under control “with a focus on hiring.”
Last Monday (March 23), 22 business groups sought rehabilitation and financing programs or a stimulus package to help businesses hit hard by the pandemic.
The groups said businesses should get help pay workers to keep them on quarantine “and, when the pandemic is under control, to rehire and resume normal operations.”
“What is required now is the ability of the government to move funds around to meet the new requirements,” said Dominguez. He said he appreciated the position of the Financial Executives Institute of the Philippines (Finex) to focus “on what is required.”
In a March 20 letter, Finex urged Congress to unleash not only unspent budget funds but also resources of government-owned or -controlled corporations (GOCCs).
Finex called for an “emergency calamity amelioration program” to “urgently support and rescue the most vulnerable sectors of our society.”
These are “the millions of poor, jobless and disadvantaged, who are feeling the brunt of this national calamity,” Finex said.
“You know this stimulus package—we don’t even know what’s the point of giving tax credits and giving a stimulus package now when you have no workers,” said Dominguez.
“What’s the point? The workers are in quarantine. We want them to be on quarantine so that the disease doesn’t spread,” he said.
“Let’s talk about that later,” Dominguez added, referring to proposals to launch a stimulus program for businesses.
Giving away tax breaks, even during crisis times like these, run contrary to the DOF’s proposal to make sense of fiscal incentives that investors enjoy under the proposed Corporate Income Tax and Incentives Reform (Citira) Act.
Dominguez also said as COVID-19 runs roughshod over businesses and livelihood, forgone tax revenues in 2020 could reach P286.4 billion if gross domestic product posted zero growth or P318.9 billion if the economy contracted by 1 percent.