‘Citira to cut 700,000 PH jobs’
Credit to Author: MAYVELIN U. CARABALLO, TMT| Date: Tue, 24 Sep 2019 16:26:02 +0000
THE proposed rationalization of tax incentives under House 4157, or the Corporate Income Tax and Incentives Rationalization Act (Citira), would result in the loss of 700,000 jobs in its first year of implementation, the Joint Foreign Chambers (JFC) of the Philippines warned on Tuesday.
In a presentation of estimates to the Senate, JFC representative John Forbes said Citira would destroy “a highly successful incentives system that foreign investors benefit [from].”
The second package of the Duterte administration’s Comprehensive Tax Reform Program and formerly known as the Tax Reform for Attracting Better and High-quality Opportunities bill, Citira not only proposes to streamline fiscal incentives, but also reduce corporate income tax (CIT) from 30 percent to 20 percent in 10 years.
The House of Representatives approved the measure on third and final reading on September 13. A counterpart bill is being studied by the Senate ways and means committee.
Forbes, also senior adviser of the American Chamber of Commerce of the Philippines, said the 202 million direct jobs and almost 8 million indirect ones generated by foreign investors were put at risk because of the uncertainty created by Citira.
“[W]e project from the industry associations that are with me today a job loss of 121,000 direct jobs in the first year of Citira if it’s implemented as is, and indirect job [losses] of 582,000 for a total of around 700,000 jobs,” Forbes said.
According to him, maintaining the current tax incentive regime could sustain the growth rate of jobs being created.
“If we can continue with a proven system that has created jobs and grow at 5 to 10 percent in the industries that are with me today, then we can create 1 to 2 million additional direct jobs, and 4 to
8 million indirect jobs over the next decade,” Forbes said.
For his part, Finance Undersecretary Karl Kendrick Chua defended Citira, saying investors must look at the bigger picture.
“I think what is important this we look at the reform as a package, because in the past Congresses, what happened was the government proposed a fiscal incentives rationalization by itself without additional offsetting measures,” Chua explained.
These measures, he said, include the reduction of the CIT from 30 percent to 20 percent, the adjustment period for the rationalization of incentives, and incentivizing proper behavior of firms.
These, the Finance official estimated, will result in an additional 1.6 million new jobs.
Singapore firms support Citira
Also on Tuesday, the Department of Finance (DoF) said it had secured the support of the Singapore Business Federation (SBF) for the performance-based, time-bound, targeted and transparent (PTTT) fiscal incentive regime embodied in Citira.
In a statement, the Finance department said the SBF delegation, led by Chairman Teo Siong Seng, expressed its support during a meeting with Finance Secretary Carlos Dominguez 3rd.
“This is welcome news. While many Singapore companies have established operations in the Philippines in industries, such as manufacturing and infrastructure, there are untapped opportunities in areas such as information technology and digital solutions, which our companies with the capabilities will be able to take up,” Teo was quoted as saying in the statement.
During the meeting, the DoF said Dominguez made it clear that the Philippines is not eliminating investment incentives under Citira, but just wants these to be more like what they offer in Singapore, which adheres to the PTTT principle.