FINANCE Secretary Carlos Dominguez III on Tuesday warned that a shorter time frame for the proposed reduction in corporate income tax may widen the country’s budget deficit.
In an ambush interview on the sidelines of a business forum, Dominguez said that a faster drop in rates would also mean a credit downgrade. “If we drop the corporate tax too quickly, we are going to balloon our deficit; ballooning our deficit is going to mean a credit downgrade; if a credit downgrade happens, everybody’s interest rate goes up, so what’s the use of it?” Dominguez explained.
“I agree that it is a long period, but we actually have a choice here. I believe that governance and management is always about making choices,” he added.
Dominguez assured that the Philippines would not lose out to investments and supply chains moving from China to other Asean countries. “I believe that when foreigners make investments in the country, they look at a number of things. First, they want to see stability in policy, second they want to see fairness of the legal system and the safety of their personnel,” the secretary said.
The House Bill 4157 or the Corporate Income Tax and Incentives Rationalization Act (Citira) seeks to lessen the current 30-percent corporate income tax rate by two percentage every other year until 2029 to bring it to 20 percent. The Philippines has one of the highest CIT rates in Asia as of 2019.
Image credits: Roy Domingo