GMA says govt lost P47B from redundant incentives

THE Philippine government has been offering fiscal incentives to investors, which have become redundant since these incentives are provided under different laws with differing provisions, Rep. Gloria Arroyo of Pampanga second district said Monday.

The former President disclosed that the fiscal cost of these incentives in the form of foregone revenue is already pegged at P47 billion.

“This amount could substantially fund basic social services in the form of more school buildings, more hospitals, or more infrastructure facilities like more roads, bridges, ports, among others,” Arroyo said.

Having said so, Arroyo filed House Bill 3162 or the Consolidated Investments Code of the Philippines which aims to stir countryside development by granting appropriate income tax incentives to investors investing in the 30 poorest provinces and equally promoting exports regardless if they are outside or inside economic zones.

Arroyo, an economist, expects her measure to eliminate competition among ecozone administrators on account of unequal tax incentives regimes by eliminating existing redundant tax incentives found in all incentive laws and replacing them with either a reduced income tax package or a gross income tax package.

Lastly, Arroyo’s proposal aims to enhance capacities and clarify the mandates and roles of concerned agencies while strengthening the monitoring and reporting processes and mechanisms in implementing these incentives.

“This measure on rationalization of fiscal incentives has long been under consideration of Congress. There is urgency in passing this measure as it will save billions and billions of revenue that would otherwise be lost,” Arroyo added.

The house bill provides for the system of administration of fiscal and nonfiscal incentives and mandates the Department of Finance to be the primary agency in charge of formulating the tax and non-tax incentives policies in the country.

In doing so, the Finance Department will consult the National Economic and Development Authority, Department of Trade and Industry, and Department of Budget and Management in so far as these incentives policies impact on the country’s economic development plan, the investment strategies and national government expenditure.

It also provides that the Board of Investments (BOI) created under Executive Order 226, will be restructured to be the primary agency in charge of investment promotions in the country.

The BOI’s functions in so far as registration of enterprise and administration of fiscal and non-fiscal incentives will then be transferred to the Philippine Economic Zone Authority while BOI’s function pertaining to the formulation of investment priorities shall be abolished.
Earlier, two lawmakers called for tax incentives for investors in the rural areas.

Rep. Juan Edgardo Angara of Aurora Lone District noted that most of the tax incentives given by the government go to highly urbanized cities and Special Economic Zones, which do not need such compensation anymore considering that these places are already developed and have a high business traffic.

“The government should think geographically when giving incentives and put the incentives to those places where there is not enough income for the people such as in Mindanao, Eastern Visayas and Eastern Luzon. These are the places that need incentives to attract investors,” Angara told reporters during the weekly Serye Cafe news forum.

Zambales Rep. Mitos Magsaysay of the Minority bloc, for her part, noted that incentives in the rural areas should be complemented with proper infrastructure to stir business activity, and eventually, development.

“Most of our good infrastructure such as airports and seaports are in Luzon. We should have these same infrastructure in Visayas and Mindanao so we can pitch these places as investment destination,” Magsaysay pointed out. –Llanesca T. Panti Reporter, Manila Times