Senate Ways and Means Committee chair Senator Pia Cayetano on Wednesday insisted that the proposed Corporate Recovery and Tax Incentives for Enterprises (CREATE) law would not negatively impact all industries in the Philippines.
Except for the garment industry, Cayetano said no other business sector was able to submit data to prove that the passage into law of the measure would result in massive job losses as feared by some economic experts.
“None of the industries were able to submit any data to substantiate the claim of job loss, compared to the garment industry. That is why we were able to carve out specific provisions for the garment industry,” said Cayetano, when she defended the CREATE bill during Senate minority leader Franklin Drilon’s interpellation on the measure.
For one, Cayetano said the committee discovered that the business process outsourcing (BPO) companies are able to recover their investments in 18 to 24 months time.
“The data we have for BPOs show that in 18-24 months, they recover their investments. Many of them have been in the country for 10 to 20 years; they have been earning,” she said.
She said nothing was ever submitted to her committee to substantiate claims that the BPO sector would be heavily impacted by the CREATE bill.
The CREATE bill primarily seeks to reform the country’s corporate tax system by adjusting the current corporate income tax (CIT) rates to generate more revenues for the government.
Earlier, 26 economists from top universities in the Philippines have issued a position paper opposing the passage of the CREATE bill saying it is the last thing businesses in the Philippines need while trying to recover from the COVID-19 pandemic, which has driven countries into recession.
But Cayetano said concerns regarding the sunset clause provision in the bill would be illogical since any current investor can start availing this after four to nine years.
“The earliest time that any current investor would start availing of the sunset clause that provides a slightly different rate would be after four (4) years, and some would go up to nine (9) years. So to say that affected sila, hindi po. In 4 years, walang magbabago (nothing will change),” she assured.
“All of this will happen post-COVID. And obviously, if there are unexpected circumstances, God forbid na tumagal pa ang COVID beyond 3-4 years, Congress can easily go back and fix that.
“But the point is, it is not accurate and unfair to say na tatamaan sila ngayon (they would be hard hit) and in the next year or two because wala pong change in the next few years. And when tatamaan sila (if they are hit), there is what we call a sunset provision that still provides them with a more gentle transition,” Cayetano emphasized.
President Duterte had earlier certified the CREATE bill—formerly the proposed Corporate Income Tax and Incentives Rationalization Act (CITIRA)—as urgent.