DOF seeks swift passage of incentives bill
Contrary to the position of foreign businessmen and the Trade department, officials of the Department of Finance (DOF) said on Wednesday that they would push for the passage of a bill under which tax incentives for investors would be sourced from annual state appropriations.
In a statement, the DOF said the proposed Tax Incentives Management and Transparency Act (Timta), or House Bill No. 2492, would “bring Philippine fiscal policy to the 21st century by leveraging data on tax incentives to inform a better policy development process and tax incentives system.” The Finance officials then urged legislators to swiftly pass the bill.
The bill was filed by Camarines Sur Rep. Maria Leonor “Leni” Gerona-Robredo.
“The passage of Timta is consistent with the reform trajectory of the Aquino administration, as it bolsters transparency and accountability in how resources of the government are foregone for the private sector in the interest of economic development,” the DOF said.
The Philippines, it pointed out, remains one of the few countries in the world that cannot measure the total amount of tax perks—which represented losses to government coffers—given to investors.
“The aggregate amount of tax incentives granted by the government is largely unknown. Without updating our policy tools and monitoring systems, we cannot gauge their effectiveness, nor can we properly calibrate government decisions to optimize our economic growth potentials. The current situation simply will not do,” said Finance Undersecretary Jeremias N. Paul Jr.
“This lack of information is troubling,” Finance Secretary Cesar V. Purisima added. “We are currently living in an age where data and information are premium commodities for effective decision-making. And yet, our current system forces us to blindly grant tax incentives to investors without understanding its full economic impact.”
The Joint Foreign Chambers of the Philippines and the Department of Trade and Industry (DTI) are opposing the passage of Timta, claiming that it will “hamper the exercise and operations of the … investment promotions agencies, in view of the rigid government budgetary processes in the passage of the appropriation law, as well as the actual implementation of this system.”
Foreign business groups and the DTI had likewise warned that it would burden prospective investors, erode the country’s competitiveness, and lead to legal challenges.
But the DOF maintains that such fears on Timta are unfounded.
“There is no reason why we cannot show the public the amount of incentives … if we assume that we are granting them based on investors’ performance. The Filipino people have a right to know how and how well their money is being used towards encouraging investment in the country,” Purisima said.
