DOF: Ex chief backs corporate tax reform

Former finance secretary Cesar Purisima underscored the need for long-overdue reforms in the corporate tax system to bolster the country’s competitiveness. He expressed full support for the proposal to modernize incentives for businesses and reduce the corporate income tax (CIT) rate to improve the collection efficiency of revenue agencies, the Department of Finance said in a statement.

Purisima also congratulated his successor, Finance Secretary Carlos Dominguez III, for the enactment into law of the Tax Reform for Acceleration and Inclusion (TRAIN) Law, the first package of the Duterte administration’s comprehensive tax reform program, which, he said, “was a resounding victory for our economy and has set us on a path to fairer and faster growth.”

“I am happy to see the credit watchers have noted the decisiveness with which the government—with your leadership—further strengthened our fiscal base in preparation for a surge of public investments,” Purisima said in his letter to Dominguez dated April 17. “I wish you even more success as you shepherd the passage of Package 2.”

Package 2 of the CTRP, which is now pending in the House of Representatives, aims to lower CIT rates while modernizing investment incentives to level the playing field for 95 percent of business enterprises in the country.

“While corporate income tax rates are relatively high in the Philippines, tax efficiency is quite low. Thus, lowering rates while expanding the tax base and improving (through simplifying) compliance is indeed the best way to address this challenge,” said Purisima, who is now the Asia fellow for the California-based economic think tank Milken Institute.

Purisima said “the DOF’s (Department of Finance’s) proposals for Package 2 come from a sound understanding of our remaining constraints to growth and a reasoned judgment on what needs to be done to overcome them.”

He noted that the reforms proposed by the DOF under Dominguez’s leadership “have been a long time coming, and are critical for the country to bolster our competitiveness.”

The former finance chief told Dominguez he was express(ing) on record his “full support (for)) the administration’s efforts to make the tax system fairer, simpler and more efficient.”

“I am proud to continue supporting the government’s comprehensive tax reform program,” Purisima said. /