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Friday, March 29, 2024

House panel okays tax reform part 2

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The House of Representatives’ Committee on Ways and Means on Wednesday approved the second part of the administration’s tax reform measure, dubbed the Corporate Income Tax and Incentive Rationalization Act (CITIRA) bill, by a 27 to 2 vote.

The committee, led by Rep. Joey Salceda of Albay, approved House Bill 313, which proposes to cut the corporate income tax rate and rationalize the incentives for businesses. The CITIRA bill used to be called the Tax Reform for Attracting Better and High-quality Opportunities (Trabaho) bill.

House Majority Leader and Leyte Rep. Martin Romualdez attended the committee deliberation.

The bill is expected to be tackled in the plenary session next week.

This developed even as the House opened the plenary debates on the bill increasing the excise tax rates on alcohol products, where Romualdez is one of the principal authors.

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Last Tuesday, the panel approved Salceda’s House Bill 1026, which increases the excise tax rates on alcohol products and the indexation rate to 10 percent to account for inflation and income.

HB 1026 was expected to be approved on second reading Wednesday night.

In his State of the Nation Address last month, President Rodrigo Duterte urged Congress to pass a bill that also intends update the incentives given to big businesses, such as tax holidays to attract more foreign investors, as well as the bill increasing the excise tax on alcohol products, heated tobacco products and vapor products.

HB 313, authored by Salceda, proposes to bring down the corporate income tax rate from 30 percent to 20 percent, and to ensure that the grant of fiscal incentives would help bring in the greatest benefits, such as higher and more dispersed investments, higher quality job opportunities and better technology.

The bill proposes to grant income incentives for a maximum of five years, removing the perpetual five percent incentive on gross income earned and limiting income tax holiday. 

“The measure also aims to ensure fairness and transparency in the grant of fiscal incentives and enhance the accountability of corporate taxpayers through refinement in tax administration,” Salceda said.

The 17th Congress under the leadership of Speaker Gloria Macapagal-Arroyo approved the measure, then House Bill 8083 and from the Tax Reform for Acceleration and Inclusion or TRAIN under Republic Act 10963.

The TRABAHO bill used to be called TRAIN 2, in reference to the Tax Reform for Acceleration and Inclusion that was passed in the first half of Duterte’s term. TRAIN, which took effect in January 2018, imposed new and higher taxes on fuel, sugar-sweetened beverages and tobacco products and reduced the income taxes for millions of individual taxpayers.

Reps. Arlene Brosas of Gabriela and Carlos Zarate of Bayan Muna voted against HB 313.

“[CITIRA] bill dangerously accords the President broad powers to award land rights and power subsidies as incentives to investors,” Brosas said.  

“It pampers corporations which are close to the President with unli-acquisition of land, as well as power and water subsidies on top of reduced corporate income taxes and juicy fiscal incentives.

“Meanwhile, ordinary workers, especially those in MSMEs, will have to face mass layoffs as these small firms will potentially face reduced incentives under the measure.”

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