Finance Secretary Carlos Dominguez III urged lawmakers on Wednesday to urgently pass the Corporate Income Tax and Incentives Rationalization Act (CITIRA) bill to stimulate the sagging economy due to the pandemic coronavirus.
In a Harvard Business Group's briefing, Dominguez cited the move of the Congress to pass a legislation for a stimulus bill, which he said "won't pass very easily."
"Hearings in House, Senate, right? Right now we already have the CITIRA bill passed in the House and it is already in the
Senate and it is a stimulus bill because it reduces taxes for everyone, whether or not you were hit by the COVID virus. Everyone was hit but others were worse," Dominguez said.
"I encourage them to please pass the CITIRA bill because of tax incentives there that can act as stimulus to the economy," Dominguez said.
Dominguez noted the socio-economic impact of the pandemic, adding the government was anticipating a significant contraction of the country's gross national product.
"By our estimates, we expect as many as 1.2 million jobs will be temporarily lost. That sets back over recent gains in employment and poverty reduction," he said.
He said revenues would likely remain flat or fall below 2019 levels and budget deficit could widen to 5.3 percent of GDP.
"We will need to bridge this gap with additional borrowings. Our debt to GDP ratio could increase to 6.7 percent," he said.
Dominguez said the government's prudent management strategy would be used to enable the country to borrow from multinational institutions and concessional rates to support the economy.
CITIRA aims to lower over time the corporate income tax to 20 percent from the current 30 percent, which is the highest in the Association of Southeast Asian Nations.
This reform will also rationalize a badly tangled fiscal incentives system to create a level playing field, especially for new businesses coming into the economy, and generate around 1.5 million new jobs.
It will also overhaul the current system that has given away P441 billion of tax perks in 2017 alone to only 3,150 companies that enjoy discounted CIT rates of between 6 and 13 percent, while almost a million other firms, including small and medium enterprises that employ a majority of Filipino workers, pay the regular rate of 30 percent, Dominguez said.
A DOF study earlier said the government was also cheated of about P63 billion in 2017 by firms that either abused transfer pricing rules or shifted profits and costs to reduce their tax liabilities.