DOF urged to study possible impacts of CITIRA once approved by Congress

Published September 29, 2019, 4:38 PM

by Gabriela Baron & Minka Klaudia Tiangco

By Hannah Torregoza

Senator Sherwin Gatchalian on Sunday called on the Department of Finance (DOF) to carefully study the possible impact of the proposed Corporate Income Tax Incentives Reform Act (CITIRA) if Congress approves the measure.

Sen. Sherwin Gatchalian (Senate of the Philippines / MANILA BULLETIN FILE PHOTO)
Sen. Sherwin Gatchalian (Senate of the Philippines / MANILA BULLETIN FILE PHOTO)

Gatchalian said the DOF, in particular, should study how it plans to protect the jobs of thousands of Filipinos, in the event the CITIRA bill is enacted into law.

The senator, who is vice chairman of the Senate Committee on Economic Affairs, admitted he was anxious over the passage of CITIRA, especially when the job security of 700,000 Filipinos is at stake because of the removal of the incentives being enjoyed by many Philippine-based companies and corporations.

“We are very sensitive to job losses and we are very sensitive to job creation. I think everyone is striving to create jobs,” Gatchalian said.

The senator said that the bill, itself, recognizes that there would be job losses once it takes effect, citing provision of Section 312 of CITIRA stating that “the following amount shall be appropriated to compensate workers that may be displaced by rationalization of fiscal incentives to improve employability and so on.”

“Even the bill recognizes job losses. It recognizes displacement. Mahirap ho sa amin suportahan ang isang batas kung alam naming marami ang mawawalan ng trabaho (It is hard for us to support a measure if we know that a lot of people would lose their jobs),” he pointed out.

“So we are creating jobs on one hand but we are also displacing people on the other. And that is embedded in the bill. The bill itself gives us a signal that there will be job losses,” he stressed.

During the recent hearing of the Senate ways and means committee on CITIRA, the Joint Foreign Chambers (JFC) of the Philippines estimated that around 703,000 jobs are at stake should the proposed fiscal incentive system under the proposed tax plan be approved.

American Chamber of Commerce senior adviser John Forbes, who represented the JFC during the hearing defended the Philippines’ existing fiscal incentives regime, which he said compensated for the high cost of investing here in the country.

Should Congress pass the CITIRA law, Forbes warned that 121,000 direct jobs and 582,000 in indirect employment would be cut.

Meanwhile, retaining the current tax perks would sustain a five (5) to 10 percent annual increase in the labor sector or equivalent to one to two million direct and four to eight million indirect jobs generated in the next 10 years.

For this reason, Gatchalian urged Finance Undersecretary Karl Kendrick Chua to thoroughly study the impact of CITIRA on the job security of many Filipinos.

He said the DOF should, likewise, conduct a comparative analysis on the costs of producing goods and doing business in the Philippines, among others.

“I want to demonstrate that to the Committee because we have to cover all of these things in order to come up with an educated decision to be able to support this bill, or to at least come up with some adjustments,” the senator suggested.