House pitches own Citira tweaks

PRESIDENT Duterte may be allowed to tweak the corporate income tax (CIT) reduction and fiscal incentives of investors affected by the Covid-19 crisis under the proposed revision of an economist-lawmaker to the proposed Corporate Income Tax and Incentives Rationalization Act (Citira). House Committee on Ways and Means Chairman Joey Sarte Salceda, the principal author of the measure, said the proposed changes will grant the President—and not a fiscal incentives board—the flexibility to grant CIT and fiscal incentive to firms affected by the crisis. “We intend to insert Covid-19 as eligibility during the bicameral conference committee meeting with the Senate,” he said. The proposed Citira, which seeks to boost the country’s gross domestic product by 3.6 percent annually while adding only 0.9 percent to inflation, was approved by the House of Representatives last year but is still pending before the Senate plenary. Salceda was reacting to reports that Finance Secretary Carlos Dominguez and newly named Acting Socioeconomic Planning Secretary Karl Kendrick Chua, in separate briefing, are looking to tweak the Citira provisions in a bid to factor in the impact of Covid-19 and provide relief to businesses. Dominguez said the DOF is looking into the possibility of granting the Fiscal Incentives Review Board (FIRB) the flexibility of tailoring programs to the needs of individual companies. On Thursday, Senate Minority Leader Frank Drilon said that “an acceleration of the scheduled reduction in corporate income taxes can provide the relief.” But, Drilon, in a text message to the Businessmirror, also reminded policymakers that “the fiscal issue and deficit of such acceleration of the scheduled reduction must be addressed.”

Maximum flexibility

UNDER Salceda’s proposal, maximum flexibility to grant CIT and incentives will be given to the President. This proposed Citira or the Package 2 of the Comprehensive Tax Reform Package seeks to reduce the 30-percent corporate income tax to 20 percent gradually by lowering the same into 2 percent every after 2 years. The proposed Citira seeks to amend sections of the National Internal Revenue Code to reduce corporate income tax in the next decade, while gradually removing tax breaks for investors. But with Salceda’s flexibility proposal, the President can allow a Covid-19-affected firm to get lower CIT rate early. Salceda is not keen on Dominguez’s remark that the DOF is looking into the possibility of granting the FIRB the flexibility of tailoring programs to the needs of individual companies. Salceda described this as “undue delegation to an agency with limited capacity and history in planning implementation and overnight.” He also reminded that “Congress remains the chief policymaking body.” “Under Citira, FIRB is already designed to study investment proposals and determine their contribution to national goals set and defined by Congress. Any deviation or flexibility I’d rather give to the President as head of Neda Board. The FIRB at best can propose them but not approve them,” Salceda said. The FIRB, to be institutionalized under the Citira bill, is tasked to review and approve all projects seeking to obtain incentives from the

government. Under the bill, the FIRB will be chaired by the Finance Secretary. Currently, the Philippine Economic Zone Authority and investment promotion agencies (IPAS) have the power to grant incentives to registered enterprises inside economic zones. Earlier, the Philippine Chamber of Commerce and Industry (PCCI) appealed to the government to keep its generous incentives for firms to attract companies, which are now relocating out of China.

Villanueva’s reminder

THIS developed as Sen. Joel Villanueva prodded the Department of Labor and Employment (DOLE) to “mandate industries, sectors to put Covid-19 mitigation measures before allowing to resume operations” following the lockdown. “Once certain sectors are allowed to operate as the government restarts the economy, the DOLE must mandate employers to conduct regular, randomized tests on its workers to monitor and mitigate the spread of Covid-19,” the senator suggested. Given the gargantuan task of striking a balance between public health and the economy, policymakers, said Villanueva, should consider allowing industries and sectors providing essential goods and services to operate as long as they maintain hygiene and sanitation protocols, coupled with regular testing among their workers. He proposed that industries necessary to boost the economy may be “allowed to operate provided they follow strict protocols on social distancing, sanitizing and use of personal protective equipment, among others,” citing a discussion paper by the University of the Philippines School of Economics (UPSE) on the topic. See related story on Page A8, “UP group lists restrictions for old folk, worksites after ECQ lifting.” Villanueva, who chairs the Senate Committee on Labor, pointed out that “one of the most important insights from the paper is the value of conducting randomized testing of workers for surveillance and monitoring. This is very important to make sure that we also catch those who are asymptomatic.” “Those who can work from home should continue to do so, especially our senior-aged workers who are at a high risk of contracting the disease. We now have a law on work flexibility and we should continue to take advantage of that,” he added. Villanueva cited occupational safety and health standards in prodding DOLE to “set guidelines and parameters on resuming its operations, keeping in mind minimizing the risks of workers to contract the disease.” He proposed that industries and sectors that would be allowed to resume operations should likewise provide temporary lodging and pointto-point transportation for its workers to minimize their risk of contracting Covid-19 from their communities and give them a lift since public transport is limited. Moreover, Villanueva noted that online selling platforms and logistics are two sectors that have shown resilience given the strict enforcement of social distancing and community quarantine, adding that brick-and-mortar stores which belong to micro, small and medium enterprises (MSME) should also consider adapting to the times so they could resume operations.