Tax perks removal mean job losses – JFC

Economic disaster in the form of job losses await the Philippines should it continue to rationalize the tax incentives currently enjoyed by investors in the Philippines.

Under the Corporate Income Tax Incentives Reform Act (CITIRA), the fiscal perks presently enjoyed by foreign corporations are to be recalibrated as a system that is performance-based, timebound, targeted and transparent.

Joint Foreign Chambers (JFC) of the Philippines representative John Forbes said the recalibration mean the loss of some 121,000 direct jobs on the first year of its implementation alone. This, on top of another 582,000 in indirect employment.

“On the other hand, retaining the current tax perks will sustain a 5 to 10 percent annual increase in jobs,” Forbes said Tuesday at the Senate committee on ways and means hearing the CITIRA.

“That would translate into 1 to 2 million direct and 4 to 8 million indirect jobs generated in the next 10 years, he added.

Semiconductor and Electronics Industries in the Philippines Inc. (SEIPI) President Dan Lachica shared the same sentiment, noting the CITIRA may claim up to 387,000 jobs in the electronics industry.

“We estimate 50 percent of electronics companies will leave the Philippines between 2022 and 2026, Lachica said. Such a decision, he added, “would be a result of the obsolescence of parts in the domestic supply chain.”

“Several companies are formulating exit plans” already, he reiterated.

Finance Undersecretary Karl Kendrick Chua defended the proposed bill, and urged critics to look at it as a package.

“We have lowered of corporate income tax, the biggest incentive that will create an estimated 1.6 million jobs,” Chua countered.

He also said the DoF will look into the proposals aiming to extend the adjustment period between the old and new tax incentives systems.

CITIRA is among the few remaining packages under the Duterte administration’s Comprehensive Tax Reform Program, which aims to recalibrate the Philippine tax system.