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THE Department of Finance said a bill streamlining
the country’s fiscal incentives for investors, if passed in
Congress, would generate more revenues for public infrastructure and
education.
Finance Secretary Margarito Teves
said the department’s proposal calls for allocating 50 percent of
the revenues saved from the reduction of tax perks to finance
infrastructure. The other half would fund education-related
programs, he said.
“Improving infrastructure and
human resource capability is deemed a more permanent response
towards enhancing the competitiveness of the Philippines,” the
finance secretary said.
He said the government has to
streamline its fiscal incentives system to make it an efficient and
effective tool for investment promotion, adding the proposed bill
will generate P5 billion in revenues for the government.
The Finance department has been
pushing for the lifting of the income tax holiday (ITH), which is
embodied in the fiscal incentives reform bill.
The agency said the ITH has been
one of the most abused fiscal incentives.
Under the proposed legislative
measure, the government would phase out fiscal incentives that are
inconsistent with World Trade Organization rules, by adopting a
single fiscal incentives law and extending tax perks to a few and
focused list of industries.
The rationalization of fiscal
incentives is part of the larger tax reform package introduced in
Congress way back in 1997 to balance the government’s budget.
The bill that was introduced to
this effect never took off, partly because of lobbying by some
interest groups as well as the internal policy conflict between the
finance department and the Board of Investments, an attached agency
of the Department of Trade and Industry.
--Chino S. Leyco
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