‘Be more mindful of reform outcomes’

The government should look deeper into the consequences of its reforms and put in place safeguards for such, especially those seen affecting vulnerable sectors as farmers and other workers in key economic actors.

Ateneo School of Government Dean Dr. Ronald Mendoza said this in light of the current push for the Corporate Income Tax and Incentive Reform Act (Citira), the second package of the Duterte administration’s tax reform program which seeks to reduce corporate income tax and at the same time, rationalize fiscal incentives.

Mendoza cited the passage of the Tax Reform for Acceleration and Inclusion (TRAIN 1) and the consequent high inflation due to higher oil and rice prices last year, and the Rice Tarriffication Law this year which saw farmers suffer from reduced palay farmgate prices as rice imports shoot up.

“Both these earlier reforms should offer much food for thought when embarking on further reforms, given that their roll out issues have not yet been fully sorted out,” Mendoza said at the Philippine Economic Zone Authority’s roundtable discussion in Taguig on Tuesday, 8 October.

“There are even reports that the cash transfers to protect poor and low income households from the impact of TRAIN1 have not even been fully paid out — even as the law was passed in 2017.”

He said the rationalization of tax incentives proposed under Citira, which would mean reduced incentives in some sectors, could also impact investment and employment in the sectors.

Citira aims to reduce CIT to 20 percent from a high of 30 percent, as well as implement drastic changes in the existing incentive regime, including the removal of the five percent tax perk on gross income earnings which PEZA-registered currently enjoy.