A day after President Aquino asked Congress to prioritize the passage of the Rationalization of Fiscal Incentives (RFI) bill, the chairman of the House Committee on Ways and Means on Tuesday said that the lower chamber will pass the measure by December.
House Committee on Ways and Means Chairman and Liberal Party Rep. Romero Quimbo of Marikina said the technical working group (TWG) of his panel is now finalizing the consolidated version of the measure.
“We’re happy that the President stated it [during his last State of the Nation Address on Monday],” Quimbo said.
“The TWG is now finalizing the RFI bill…so we are very pretty confident that we will be able to finish it by December at least in the lower chamber,” he added.
Quimbo said the RFI bill will be passed into law before the 16th Congress ends in June next year.
According to Quimbo, the government is losing billions of pesos by giving incentives.
“We lose P148 billion in 2013 on fiscal incentives but [with the passage of the RFI bill] we want to make sure that we will only remove incentives to those industries that don’t deserve it…. However, those who deserve it, meaning those that generate jobs, like manufacturing, as well as export-oriented, we will not only protect them but we will, in fact, even increase their incentives so that we can make it competitive,” the lawmaker said.
Quimbo said that industries need to be export-oriented, and must be able to attract foreign direct investments to get incentives.
Earlier, Quimbo said the Joint Foreign Chamber and the Philippine business groups have expressed concern for the passage of the RFI.
“They expressed concern over fiscal incentives rationalization. But I gave them assurance that the fiscal incentives rationalization bill we will pass shall be something that will make our investment climate more attractive and not the contrary,” the lawmaker said.
The RFI bill has been facing strong opposition from business groups due to its provisions, particularly the lifting of the tax- and duty-free incentives of several industries.
Under the RFI draft bill submitted by the Department of Finance (DOF) and Department of Trade and Industry (DTI) to the House Committee on Ways and Means, companies registered with the Philippine Economic Zone Authority (Peza) are given two options in the measure.
They can opt for a four-year income-tax holiday (ITH) with either 5-percent tax on gross income earned (GIE) in lieu of local and national taxes, except value-added tax (VAT) and real-property tax (RPT) for 11 years, or 15-percent reduced tax on corporate income in lieu of local and national taxes, except VAT and RPT for 11 years, the bill said.
Peza-registered companies under the second option are given the choice of either 5-percent GIE for 15 years, in lieu of local and national taxes, except VAT and RPT for 15 years, or 15-percent reduced tax on corporate income in lieu of local and national taxes, except VAT and RPT for 15 years.
Quimbo, citing the DOF-DTI draft bill, said that it is a policy of the state to grant investment incentives that encourage long-term and recurrent investment, are simple to administer, time-bound and whose performance and outcomes are easily verifiable.
Earlier, the DTI urged Congress to pass the RFI bill in 2015, fearing it might be overrun by events if not approved within the year.
Meanwhile, Liberal Party Rep. Jerry Treñas of Iloilo has said the lawmakers should carefully review the RFI bill.
“Fiscal incentives rationalization, however, must be done after careful review by the concerned government financial agencies and upon proper consultation with the affected industries. We must ensure that proposed legislation rationalizing incentives should not adversely affect our ongoing programs that encourage direct investments and the growth of local industries,” he said.
Deputy Majority Leader and National Unity Party Rep. Magtanggol T. Gunigundo of Valenzuela said that any rationalization must be predicated on a tax system that is easy to comprehend and comply with.
Also, Abakada Rep. Jonathan de la Cruz and Cibac Rep. Sherwin Tugna supported the passage of fiscal incentives rationalization.
“I am for the enactment of the bill. It is about time we rationalize our tax regime if we are to be globally competitive,” de la Cruz said.
For Tugna, “I may support to amend the current incentives to be reasonable, making them a win-win situation for both the government to get revenue from taxes. However, the bill should not dissuade foreign investors and make our country attractive to foreign investors.”