Guinigundo: Good infra better than tax incentives
While the government's proposal to rationalize corporate incentives has scared investors, addressing the country's aging infrastructure is what needs to be prioritized foremost to keep investors interest, a central bank official said.
In an interview yesterday, Bangko Sentral ng Pilipinas deputy governor Diwa Guinigundo said he believes the corporate tax reform the government is now pursuing is not meant to discourage investors. Guinigundo was in Cebu Friday for the public forum on inflation and tax reform, among the recent pressing economic issues that have gotten public attention.
Guinigundo explained other Southeast Asian countries have limited incentives offered but are still getting a lot of investments because of their good infrastructure and ease of doing business.
These two, the official pointed out, are what the Philippines must address while it pursues to have a fairer and efficient corporate tax system.
He said the country's neighbors in Southeast Asia are able to invite more investors because of their ease of doing business.
Guinigundo also said the Philippines has an advantage over its neighbors especially when it comes to human capital.
He said the country's "trainable and educated" workforce is its main edge, noting the majority of English speaking Filipinos.
Ira Camarao, economist at the Department of Finance, also said during the forum that the lack of incentives is not a leading problem for doing business in the country.
In fact, she cited the most problematic factors include inefficient government bureaucracy, poor infrastructure, corruption, tax regulations, policy instability and tax rates, among others.
The Philippines is in the midst of an ambitious tax reform to raise revenue to help fund its P8-trillion infrastructure plan.
But a part of the proposal, under the second package of the Tax Reform for Acceleration and Inclusion (TRAIN), is to cut income tax holidays and duty-free imports, causing uncertainties among investors.
The government had also passed TRAIN's first package which brought down personal income taxes but raised taxes on fuel and sweetened beverages. The new tax bill has also been blamed on the rising prices of basic goods, which has put so much pressure on ordinary consumers.