MANILA, Philippines – The Department of Finance is strongly urging Congress to immediately pass the Tax Incentives Management and Transparency Act (TIMTA) to bring Philippine fiscal policy into the 21st century and attract more companies to do business.
“While tax incentives have long been used by governments worldwide as a fiscal policy lever to spur economic growth and investment, the Philippines stands as one of the few countries where tax expenditures arising from these tools are still kept in the dark,” the DOF said.
Finance Undersecretary Jeremias Paul Jr. cited the need for the Philippines to update its tax incentives system if it wants to compete head on with its neighbors under a fully integrated Asean economy.
Paul said the proposed measure would institutionalize a system of monitoring and reporting tax expenditures as well as promote transparency and accountability in the grant of tax incentives.
“The (DOF) fully supports the proposed bill by Rep. Leni Robredo. The aggregate amount of tax incentives granted by the government is largely unknown. Without updating our policy tools and monitoring systems, we cannot gauge their effectiveness, nor can we properly calibrate government decisions to optimize our economic growth potentials. The current situation simply would not do,” Paul said.
A monitoring and accountability mechanism will effectively account for the utilization of public funds including those that are spent through the grant of tax incentives to businesses and activities.
Finance Secretary Cesar V. Purisima said: “This lack of information is troubling. The government has a very limited capacity to know if it is granting the right amount of incentives to the right places to achieve its economic goals. We are currently living in an age where data and information are premium commodities for effective decision-making, and yet our current system forces us to blindly grant tax incentives to investors without understanding its full economic impact.”
“I urge our colleagues in Congress to pass this bill swiftly; every day we wait is another day lost in our race for competitiveness. It is already 2015: high time that we become smart enough using data to inform our policy decisions,” Purisima said.
A better monitoring system grants the government information for analysis, which will translate into a more efficient tax incentives system.
“There is no reason why we cannot show the public the amount of incentives availed if we assume that we are granting them based on investors’ performance. The Filipino people have a right to know how and how well their money is being used towards encouraging investment in the country. Every Filipino has a right to know how much our tax money is worth,” Purisima said.
In line with the government’s priorities on fiscal prudence and transparency, tax expenditures of the government will be reported annually in the national budget to facilitate analysis of the cost and economic impact of incentives granted. -Zinnia B. Dela Peña (The Philippine Star)
Read more: http://www.philstar.com/business/2015/03/12/1432513/dof-pushes-immediate-passage-tax-incentives-measure#ixzz3U8PmW0rj
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