Dominguez tells CITIRA opponents: Read the bill

Read the law, this is Finance Secretary Carlos G. Dominguez III’s suggestion to individuals claiming that the second tax reform bill will cancel all the incentives being granted by the government to priority industries.

Describing the opponents of the corporate income tax and incentives rationalization act (CITIRA) as “ignorant people,” Dominguez explained the measure, once passed into law, will essential review the 1441 billion in annual tax breaks given to corporations.

In particular, Dominguez picked on Philippine Economic Zone Authority (PEZA) Director General Charito B. Plaza, who the finance chief believes may have yet to read the entire CITIRA bill now pending in the Senate.

“We have a lot of speculation from ignorant people, okay? Let’s read it and see what it says. It’s all in black and white,” Dominguez said at a forum in Taguig City yesterday, while wondering if "she [Plaza] read the proposed legislation.”

Plaza, a vocal critic of the Duterte administration-backed CITIRA bill, repeatedly said that rationalizing incentives was not needed as it may end up harming the country's attractiveness to investors.

But Dominguez rejected Plaza’s assessment, noting CITIRA will “modernize the incentive system to make incentives performance-based, time-bound, targeted and transparent.”

He also said that CITIRA adheres to standards ever similar to that of other countries.

“We will review essentially all the incentives. Now, does that mean all will be cancelled? No!” The finance chief assured.

Dominguez also noted the irony of the Commission on Audit reviewing even small spending by state agencies, while the government cannot even determine billions of pesos it gave away in the form of incentives to a favored group of companies.

“We have been giving away something like 1441 billion in one year. Don’t you wonder how we use it? Is there transparency? Is that the democratic way of doing things? I don’t think so,” Dominguez said.

On Monday, the Department of Finance (DOF) insisted that CITIRA was superior than the existing regime that only benefits more than two-thirds of the economy as priority industries.

The second tax reform will ultimately improve the current fiscal incentives system and offer superior perks targeted towards industries and areas that truly deserve them, the DOF said.

A recent study by the DOF showed that the priority industries covered by the 2017 investment priorities plan (IPP) account for a total of 69.4 percent of the whole economy in terms of gross value added (GVA).

According to the DOF, the government needs to “prioritize” its subsidy system only to industries and activities where “every peso given away as a tax incentive yields a net positive benefit to society.”

While the DOF admitted that many industries receiving the current incentives have made valuable contributions to the economy and to the Filipino people, these are not performancebased, targeted, time-bound, and transparent.

But once CITIRA is passed into law, the DOF said it will prioritize and provide better incentives to specific industries, areas, and activities where quality jobs, research and development, and expansion in less-developed areas would benefit.

Under CITIRA, companies qualified for incentives may choose to avail of up to 50 percent additional deduction on direct labor expense, and up to 100 percent additional deduction on training and development expenses.

The measure also offers up to an additional 50 percent on top of the 100-percent deduction now allowed on the purchase and use of inputs from domestic suppliers, which will benefit local industries and producers.