THE Philippine Stock Exchange, Inc. (PSE) said it backs the passage of a tax reform bill gradually lowering corporate income tax and urged the Senate, where the legislation is pending, to give it top priority.
The PSE issued the statement over the weekend to express its “strong support” for the tax reforms under the Corporate Income Tax and Incentives Rationalization Act (CITIRA) bill, saying the bill if passed will help attracting new investment from overseas and domestic investors.
“The PSE respectfully urges (the Senate Committee on Ways and Means) to prioritize the immediate passage of the CITIRA bill as we all look forward to jump-start its short- and long-term benefits to Filipinos,” it said.
The bill proposes to gradually lower the corporate income tax to 25% by 2024 and to 20% by 2029 from 30% at present. The PSE said passing CITIRA would make the Philippines competitive in the ASEAN region where corporate tax rates range between 17 and 25%, according to 2019 data from consultancy Deloitte.
“This will make the Philippines an attractive investment destination for new foreign and domestic businesses and encourage existing companies to expand their operations,” it said.
“All these will redound to job creation, higher income, increased spending and more money in circulation, a cycle that can continue indefinitely as a result of the multiplier effect,” it added.
The benchmark Philippine Stock Exchange index has been volatile in recent weeks due to the coronavirus outbreak, closing 6,770.38 last, as against 7,742.53 when the year started.
The PSE joined 10 business groups last week in backing CITIRA. Those groups were the Anvil Business Club, Bankers Association of the Philippines, Federation of Filipino Chinese Chambers of Commerce and Industry, Financial Executives Institute of the Philippines, Foundation for Economic Freedom, Management Association of the Philippines, Makati Business Club, Organization of Socialized Housing Developers of the Philippines, Subdivision and Housing Developers Association and University of the Philippines School of Economics Alumni Association.
The Senate, through its President Vicente C. Sotto III, has been unable to respond to questions for comment on the recent statements in support of CITIRA. But he said last weekend that the Senate may set the bill aside to prioritize measures that will address the outbreak of coronavirus, formally known as Covid-19.
The Philippines has reported six confirmed cases of Covid-19 as of Sunday.
The House passed its CITIRA legislation last year.
Representative Jose Ma. Clemente S. Salceda of the chamber’s Ways and Means Committee considers passage to be necessary as an “economic vaccine” against the outbreak, and warned that delay could worsen the economy.
The Department of Finance has also requested that the Senate pass CITIRA before it goes on a seven-week break.
In a text message Sunday, Senate President Vicente C. Sotto III said senators will “try our best to pass either CITIRA or PIFITA (Passive Income and Financial Intermediary Taxation Act).”
PIFITA is the fourth package of the government’s Comprehensive Tax Reform Program, which seeks to streamline the number of tax rates on financial instruments to 26 from 80, among others.
Congress will be in recess between March 14 and May 3. — Denise A. Valdez