Bicam not needed for ‘fiscally sound’ Senate CITIRA
Congressmen do not have to meet senators in a bicameral conference committee meeting on the proposed Corporate Income Tax and Incentives Rationalization Act if they are convinced the Senate’s version of the measure is “fiscally sound.”
Albay Rep. Joey Salceda, chairman of the ways and means committee of the House of Representatives, gave this assurance even as the chamber had passed the measure as early as September 2019, way before the outbreak of the coronavirus disease 2019 (COVID-19) pandemic.
“I broadly agree with the amendments. I proposed that we cut corporate income tax (CIT) faster to help COVIDafflicted businesses even before the changes were made,” he said, noting this will enable hundreds of thousands of small businesses generate up to P42 billion.
“So, with that critical input considered, it fits what I believe should be the tax policy counterpart of the economic recovery plan,” Salceda added.
He said the amendments introduced in the Senate are “aligned with my own analysis of what needs to be done.”
“It’s more money in hundreds of thousands of small businesses – and there will be no delays in the implementation, because the effect will be instant on our bottomline. The cut is effective July 2020, if the Senate can manage to pass it before June,” Salceda said.
Congress will go on recess on June 5 and will resume sessions on July 27 for the President’s State of the Nation Address.
The changes in the second package of tax reform – renamed CREATE or Corporate Recovery and Tax Incentives for Enterprises Act – include an immediate cut in CIT by five percentage points starting July 2020 up to 2022, to be followed by one percentage point cut every year until the rate reaches 20 percent, three points lower than the ASEAN average of around 23 percent. The Philippines’ CIT is at 30 percent.
“DTI and BOI should work double time on convincing manufacturers who want to move away from China to transfer here so that we can speed up our efforts in helping the economy recover from the impact of the COVID-19 crisis and create more jobs,” Deputy Speaker LRay Villafuerte earlier said.
“We are losing to Indonesia and Vietnam,” the Camarines Sur congressman lamented.
“Attracting more foreign investors to do business in the country will help our country achieve a V-shaped or quick recovery from the coronavirus pandemic’s economic fallout in lieu of a feared U-shaped one,” he added.
Villafuerte, a former governor, said that with the current setup, the Philippines cannot compete with countries like Indonesia, where the CIT is only 25 percent, or Vietnam, which imposes an even lower 20 percent CIT rate.
He said the measure would be a big boost to micro, small and medium enterprises (MSMEs) and “provide the economy the stimulus it needs to rise from the fallout resulting from the coronavirus pandemic.”
Meanwhile, the country’s largest labor group has expressed strong opposition to government ’s plan to implement the tax reform program at a time Filipinos are reeling from COVID-19.
Trade Union Congress of the Philippines (TUCP) said the CREATE bill is an affront to the workers.
“In our current economic difficulties, the first task of the government must be to defend and protect existing jobs and not to pass new taxes,” TUCP said in a statement.