DESPITE the “disagreement” between Cabinet members on the proposed Corporate Income Tax and Incentives Rationalization Act, the chairman of the House Committee on Ways and Means on Sunday said two packages of the Comprehensive Tax Reform Program (CTRP), including Citira, will be approved this week.
Albay Rep. Joey Salceda, the panel chairman, said the proposed Passive Income and Financial Intermediary Taxation Reform Act (Pifita) will be approved on third and final reading on Monday while Citira is expected to be passed on second reading on Monday; and third and final reading on Thursday.
Pifita or House Bill 304 seeks to rationalize the taxation of the financial sector so that it becomes simpler, fairer, more efficient and regionally competitive.
Also, the bill—Package 4 of the CTRP—reviews the taxes imposed on financial intermediaries and the products they offer: on savings and investments; and debt and equity instruments.
“The nation will witness the most historic week in reforms—a big win for economic reforms with huge positive gains for GDP growth and socioeconomic fairness within the context of globalization. Citira presents itself as the principal national response to the US-China trade war,” Salceda said.
‘Settle issues’
However, Salceda, in a statement, asked Cabinet members to “settle their issues” with President Duterte on the passage of Citira.
The passage of Citira is still pending at the plenary two weeks after its approval at the committee level.
In January 2018, Salceda said the President decided with the Cabinet to make Citira a flagship reform of his administration.
The Citira, Salceda said, essentially seeks two things—reduce the corporate income tax rates from 30 percent to 20 percent for the almost 1 million businesses while rationalizing incentives for some 4,100 firms who pay only five years after a period of paying none.
“In two consecutive Sonas, he appealed to Congress to pass it as a national imperative to make the country more competitive. After much committee deliberations and consultations, macroeconomic, industry and sectoral studies, thousands of pages of presentations, position papers, the House of Representatives of the 17th Congress passed it on third reading which unfortunately was not passed the Senate,” he said.
“I have learned one big lesson so I appeal to Cabinet members not to export their disagreements, admittedly mostly arising from their differing mandates and constituencies, and settle them with the President and within the Cabinet,” said Salceda, without naming the Cabinet members.
According to Salceda, the House has negotiated vigorously with the Department of Finance so that the Committee on Ways and Means has significantly improved the original DOF version.
“I concede these are honest disagreements but please do not use Congress as playground for your policy battles, or worse use us as proxies or mercenaries for your skirmishes, because you are all alter egos of one President,” he said.
While the Department of Trade and Industry is supporting the passage of the Citira, Trade Secretary Ramon Lopez earlier urged lawmakers to extend the sunset period of the bill from the original proposal of five years to 10 years within which economic zone firms are to surrender their incentives.
Philippine Economic Zone Authority (Peza) Director General Charito B. Plaza also expressed opposition to Citira’s passage.
She also wants Peza-registered locators exempted from Citira’s coverage.
However, Salceda said, “I honestly feel that it is the Cabinet who are sowing confusion, sending wrong signals and the worst thing is it is protracting the process and creating unnecessary uncertainties among investors.”
“This is a policy decision and there are risks which we have studiously examined with the best data science and analytics, and we have run simulations and built scenarios and we are comfortable that the potential benefits outweigh them,” he said.
The lawmaker also reiterated that the House version of Citira is the “best” in Southeast Asia.
“In our most reasonable estimate, Citira is good for our country, good for our people and it is the right thing to do. Cabinet members know their options, too. After all the policy noise for almost two years, it is time for them to speak with one voice. We can never perfect legislation but one thing is sure: it is bad to prolong the business uncertainty and the best thing to do is to approve it and allow investors to decide on that basis,” Salceda added.
Besides priority measures, Salceda said the House and the Executive Department agreed to pass revenue-generating tax packages before approving the proposed P4.1-trillion General Appropriations Act for 2020.