A PROPOSAL returning tax incentive power to investment promotion agencies (IPAs) will only give rise to accountability issues, professor and former Department of Finance (DoF) undersecretary Cielo D. Magno said over the weekend.
“We have to remember that incentives are foregone revenues of government which could have been used to provide social and economic services to the public. There must be accountability to ensure that when we give businesses incentives, we are getting something in return from these foregone revenues,” Ms. Magno, who currently teaches economics at the University of the Philippines, said in a Viber message.
The proposed shift, part of the CREATE MORE Bill pending in Congress, would weaken the Fiscal Incentives Review Board (FIRB) and if it were dissolved, “water down” accountability, she added.
President Ferdinand R. Marcos, Jr. sought the power to grant and approve tax incentives to IPAs, Albay Rep. Jose Ma. Clemente Salceda told the House Ways and Means Committee last week.
The move would essentially “wind down” the FIRB’s power to grant and approve fiscal incentives.
“The proposal to revert authority to the relatively autonomous IPAs will not only prevent that kind of nationally coordinated incentives system for national development but will likely even encourage them to compete with each other to attract foreign investment,” IBON Foundation executive director Jose Enrique A. Africa said via Viber.
“The first order of business on the matter of fiscal incentives is to design these as part of a much broader strategic industrialization policy and not just to attract FDI for its own sake,” Mr. Africa added.
The CREATE is also sought amendments to address issues in delayed value-added tax (VAT) refunds.
“If we want to fix VAT refund, accelerate the implementation of e-invoicing and the digitalization of BIR and pass the Ease of Paying Taxes bill,” Ms. Magno said. “Removing the accountability process in awarding incentives will not solve the problem regarding VAT refund.” — Beatriz Marie D. Cruz
