Press Release
December 20, 2017

Drilon renews calls for immediate review of business tax perks

Senate Minority Leader Franklin M. Drilon urged the administration to push for the immediate passage of legislation rationalizing the grant of fiscal incentives to business enterprises in the Philippines.

"I call on the President to exercise strong political will. He made a company pay the unpaid airport fees of P6 billion. He was able to collect from a cigarette company P26 billion. We applauded such political will. We would like such political will being applied in order to make the taxes more equitable," Drilon said.

Drilon said the continued inaction on the measure is an affront to Filipinos who would be adversely affected by the Tax Reform Acceleration and Inclusion (TRAIN) law. The foregone revenues from the lowering of income taxes is compensated by the TRAIN by, among others, imposing steep taxes on fuel, which can trigger an increase in the prices of basic commodities.

"I urge the administration and the Congress to start working on the rationalization of fiscal incentives granted to companies so that we can make our tax system more equitable," Drilon said.

He added: "The TRAIN burdened the poor with higher taxes on fuel. It's about time that we review the incentives granted to companies to see if such incentives are necessary and continue to serve the purpose for which they are granted."

He said "it is utterly unfair" that the poor would have to share the burden of raising revenues for the government under Republic Act 10963 or the TRAIN law, while the rich companies would continue to enjoy all forms of tax perks and tax holidays.

"That is against the basic principle of progressive taxation which dictates that the higher a person's income, the higher his taxes should be. It's about time that Congress address this inequality in our current tax system," he added.

Drilon said that a review of the tax incentives given to companies is long overdue. Drilon is the author of Senate Bill No. 229 or the proposed rationalization of fiscal incentives.

The senator expressed hopes that the measure will be included in the second tax reform package promised by the administration's economic managers.

"The government should review the various laws on the grant of tax incentives and plug the leakages in our tax system. The TIMTA has already provided the tools for transparency in the grant and management of incentives. The next step would be to rationalize these incentives," he added. The Tax Incentives Management and Transparency Act (TIMTA) which Drilon authored requires business entities to report all the incentives that they are enjoying - allowing the government to account for the amount of foregone revenues from various incentives given.

Drilon said that according to government data, there are more than 186 laws on numerous fiscal and non-fiscal incentives and subsidies in the country, including income tax holidays, deductions, exemptions, credits or exclusions from the tax base.

He also emphasized that according to previous estimates, the measure, once enacted, could generate P30 billion in additional revenue annually.

Drilon's bill seeks to review the government's system of granting incentives to business enterprises in the country "in order to ensure that grant of incentives promotes social and economic benefits to Filipinos."

By reviewing the grant and administration of incentives to business enterprises, Drilon said the government would be able to assess the economic impact of these incentives.

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