Many of them are important, but given that the current system is poised to subsidize more than two-thirds of the economy.
The Department of Finance (DoF) on Monday explained in detail the objectives of the proposed second package of the Comprehensive Tax Reform Program (CTRP), also known as the Corporate Income Tax and Incentives Rationalization Act (CITIRA) bill.
Responding to critics of the bill, DoF in a statement asserted that CITIRA will be offering superior incentives “targeted towards industries and areas that truly deserve them.”
“The ultimate goal of CITIRA is to eventually limit incentives to activities that truly provide a net positive impact to society,” the agency said.
Finance Undersecretary Karl Kendrick Chua admitted that the many industries presently receiving incentives have made valuable contributions to the economy.
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“Many of them are important, but given that the current system is poised to subsidize more than two-thirds of the economy, policymakers need to make tough choices between which industries and activities to prioritize if we are to ensure that every peso given away as a tax incentive yields a net positive benefit to society,” he said.
“Package 2 of the CTRP aims to make the incentive system performance-based, targeted, time-bound, and transparent. Such a system will allow us to actually prioritize and provide superior incentives to specific industries, areas, and activities for the right reasons, such as the creation of quality jobs, investments in research and development and expansion in less-developed areas and areas recovering from calamity or armed conflict, among others.”
Chua explained that incentives, which are foregone revenues, are a limited resource of the Filipino people and must be spent well.
In 2017, for instance, the Philippine government gave away a total of P441 billion in incentives — an amount equivalent to 2.8 percent of GDP — to only 3,150 companies.
Chua disclosed that this select group of firms account for less than half of one percent of more than 989,000 companies currently registered in the country.
