Finance Undersecretary Karl Kendrick Chua (left) and Albay Rep. Joey Salceda are hopeful key economic bills will be passed to sustain the priority programs of the administration and help boost the economy. (Congress photo)

The Corporate Income Tax and Incentives Rationalization Act (CITIRA) can be considered one of the most significant legislation in the country as it will leave a positive footprint in almost every sector of the economy.

House Bill 4157, approved on third and final reading in the Lower House last week with a vote of 170-8 and six abstentions, is the second package of the Comprehensive Tax Reform Program.

It is the centerpiece legislation of President Rodrigo Duterte’s administration, according to Albay Rep. Joey Sarte Salceda, House Ways and Means committee chair and lead author of CITIRA.

“It rearranges our economic structure by lowering the income tax on one million small and medium enterprises which employ most of our labor force while rationalizing incentives of 3,100 corporations and make them perform,” Salceda said.

“Passing it is the right thing to do,” added Salceda in a television interview.

CITIRA is expected to create 1.566 million jobs and add to Gross Domestic Product growth at 1.1 percent in the first year and 3.6 percent annually from 2020 to 2030, while adding only 0.9 percent to inflation.

“By reducing the corporate income tax from 30 percent to 20 percent, we are mobilizing the dynamism and efficiency, productivity, and innovation of the domestic corporate sector. We expect to re-invest 87 percent of tax savings in business expansion,” Salceda said.

A recent Philippine Statistics Authority report that foreign direct investment pledges doubled during the first half of 2019 dispelled fears of investment flight because of the CITIRA passage, the Department of Finance said.

“We are glad that investors are aware of, and appreciate, the huge strides made by the Duterte administration, including the massive Build, Build, Build infrastructure program, improvements in ease of doing business and the anti-corruption and peace and order measures,” said DoF Undersecretary Karl Kendrick Chua.

The PSA report showed a jump in foreign investment pledges in the second quarter to P49.58 billion from P30.95 billion a year ago. It added to the P46 billion worth of pledges during the first quarter, bringing the total during the first half of the year to more than double the amount last year.

CITIRA has been on top of the 18th Congress’ priority bills after it failed to pass the 17th Congress. It was known then as the Tax Reform for Attracting Better and High-quality Opportunities (TRABAHO) bill.

CITIRA also shifts investments to the countryside with 10-year incentives against five years for the National Capital Region.

“We urge local government units to work on improving ease of doing business,” Salceda said.