MANILA, Philippines - Senate President Pro-Tempore Franklin Drilon has urged the government to review and rationalize fiscal incentives granted to businesses to increase revenues, instead of raising taxes on petroleum products.
Drilon said the country’s economic managers must focus its efforts supporting the proposed rationalization of tax incentives “to generate additional revenues to help offset the projected dip in revenues that may arise from income tax cuts.”
“I hope our economic managers will work closely with Congress for the long-sought Rationalization of Fiscal Incentives Law instead of spending its time on a tax hike on petroleum products that will surely negatively affect our people,” Drilon said.
“If our aim is to increase revenues, then the government should look at reviewing the various laws on the grant of tax incentives and plug the leakages in our tax system,” he added.
He said the Duterte administration should try to exhaust other means to compensate for the expected foregone revenues from the proposed income tax cut instead of raising the taxes on petroleum products.
Drilon is the author of Senate Bill 229 seeking to review the government’s system of granting incentives to business enterprises in the country “in order to ensure that grant of incentives promotes social and economic benefits to Filipinos.”
He said the measure would cover all incentives granted by all investment promotion agencies (IPAs) such as the Board of Investments and Philippine Economic Zone Authority to foreign and local business enterprises.
By reviewing the grant and administration of incentives to business enterprises, the government would be able to assess the economic impact of these incentives.
There are about 186 laws on numerous fiscal and no-fiscal incentives and subsidies in the country, including income tax holidays, deductions, exemptions, credits or exclusions from the tax base, he noted.
These various and sometimes redundant tax incentives have resulted in billions of forgone revenues which could have been utilized to fund much-needed social services, Drilon said.
“Through this measure, we can ensure that the foregone revenues resulting from all fiscal incentives given by the state to private entities really translate to economic benefits for Filipinos – such as additional jobs or financial opportunities, countrywide development and promotion of micro, small and medium enterprises,” he said.
He recalled during discussions on the same bill during the previous Congress, the Department of Finance itself said that if passed into law, the measure is estimated to generate P30 billion for a brief period time.