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Legislators and stakeholders in the lending industry
agreed to a compromise with the Department of Finance to defer
giving tax treatment for PERA investments after three years only
after the government get rid of its fiscal woes.
“The DOF compromise is to give
incentive in 2009 after the government balanced its budget,”
according to a finance official regarding the newly approved PERA
bill.
The bill was passed in Congress
during the marathon session in February, with the lower house
adopting the proposal proposed in the Senate.
In its latest figure, the DOF
said the estimated government loss from the tax preferred treatment
as a result of the PERA bill implementation would be between P6.7
billion to P13.6 billion a year.
Investment revenue losses on the
other hand would be between P1.8 billion to P3.5 billion annually.
During the deliberation in
Congress, the DOF said that although it supports in principle the
initiative of for establishing an independent or individual
retirement accounts, it suggest that the time element of the PERA be
raised because they are apprehensive of its fiscal impact on the
economy.
Based on its previous estimates,
the DOF said that under the initial year, the Angara proposal would
result to an estimated negative revenue impact of 4.24 billion; the
Recto proposal will cause an impact of 2.69 while the Magsaysay
proposal would result to an estimated revenue impact of 4.61
billion.
The finance official noted that
these figures are only based on the tax preferred contribution to
the PERA account.
The official added that it is
crucial to determine the structure of the PERA in order that its
negative impact would not be as large and could be accommodated or
absorbed by the fiscal system.
The Bankers Association of the
Philippines (BAP) previously sought to establish a fixed income
exchange and it recommended the inclusion of lesser corporate and
municipal debt in the exchange as part of eligible investment
outlets for PERA.
On the other hand, the Lending
Companies Association of the Philippines (LeCap) requested that they
be properly represented and adding however that they respect the
decision of the Congress on deciding which regulatory agency would
be designated to oversee their operations.
Legislators debated on shifting
effect of the bill. And the DOF said that it anticipates that the
PERA would encourage the creation of new savings and would not
result only to the transfer of old savings to new accounts since it
is tax preferred.
--Angelo S. Samonte
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