"It doesn’t look like it’s going to happen within the Aquino administration, as some government officials are asking me to slow down the lowering of corporate and individual taxes," Mr. Angara told reporters on the sidelines of a briefing in Makati City, without identifying the officials.
Failure on the tax-cutting front would mean disappointment for foreign investors and a possible setback in integrating the Philippine economy with those of its neighbors in the Association of South East Asian Nations (ASEAN).
The European Chamber of Commerce of the Philippines (ECCP) is pushing the government to pass “as soon as possible” Senate Bill No. 2149 introduced by Mr. Angara last Feb 27. This bill seeks to lower tax rates to 10% from 15% for those earning between P20,000 to P70,000 a month and to 25% from the current 32% for those earning over P1 million.
“Doing business in the Philippines is more expensive than in other countries. Energy bills are high. We need some incentives and lower taxes to be able to entice more investors to come to the Philippines,” ECCP Executive Vice-President Henry J. Schumacher said during the same briefing in Makati City.
The text of the bill published on senate.gov.ph declares an intent to prepare the country for ASEAN integration, consistent with Philippine commitments to the 10-member ASEAN Economic Community Blueprint.
Mr. Angara, however, said before the ECCP members and the media that “the bill won’t be passed within 2016. The clock is ticking. By yearend, we expect the political carnival to be in full bloom. We can’t actually pass tax reforms until the House [of Representatives] does. That measure can’t leave my committee until the House passes it.”
Mr. Angara said in his speech during the briefing that current individual income tax bracket has been unchanged since 1997.
Even with a doubling in consumer prices since then, “The bracket is still the same. In order to buffer the revenue impact of the individual income bracket adjustments and the reduction of individual income tax rates, this bill spreads the reduction over a period of three years,” he said.
The Senate Committee on Ways and Means on March 3 removed the provision that pushed for budgetary allotments for tax incentives as contained in the Tax Incentives Management and Transparency Act.
Mr. Angara last week presented the committee report which consolidated two existing Senate bills, with the aim of creating a monitoring system for tax incentives given by investment promotion agencies (IPAs) and other government agencies (OGAs).
Committee Report No. 104 merged Senate Bills No. 469 and 1187, authored by Senators Franklin M. Drilon and Ralph G. Recto, respectively, into Senate Bill No. 2669 which provides for the monitoring of tax incentives through a Tax Incentives Information (TII) section in the yearly Budget of Expenditures and Sources of Financing report.
“The only requirement is for IPAs and OGAs to submit an annual report, in the form of a TII report, which shall reflect the tax incentives claimed by registered business entities and qualified private individuals or corporations, as reflected in their tax returns,” Mr. Angara said during his sponsorship speech.
Sought for comment, Mr. Schumacher told reporters on the sidelines of the briefing: “This is just a little bit of paperwork; purely for reportorial requirements. We’ll look at it again on our next meeting with the JFC (Joint Foreign Chambers of the Philippines).” -- Chrisee Jalyssa V. Dela Paz
Source: Business World Online
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