DAYS ahead of Labor Day, a party-list lawmaker belonging to the political opposition said corporations should be able to pay their employees higher wages once Congress slashes the corporate income tax rate from 30 percent to 25 percent.
“Corporations are bound to generate substantial cost-savings from the five-percentage point cut in the applicable income tax rate, and we are counting on them to use some of the extra money to help raise the living standards of their workers through higher salaries as well as non-wage benefits,” House senior deputy minority leader and Buhay party-list Rep. Lito Atienza said.
“In fact, once we have lowered the income tax rate, we are hoping that many corporations will start voluntarily adopting the profit-sharing plan for employees that we’ve been proposing,” Atienza said.
Atienza cited a COL Financial Group Inc. study showing that the reduction in corporate income tax rate to 25 percent would “immediately lead to a seven percent increase in corporate earnings.”
COL Financial is the country’s leading online stockbrokerage firm, and performs studies on the impact of policy changes, including tax reforms, on some of the biggest corporations whose shares are publicly traded on the Philippine Stock Exchange.
Atienza said that based on public records, an estimated 1,000 largest corporations–by gross revenue–alone raked in an aggregate net income of P1.5 trillion in 2016.
“Using COL Financial’s projected seven-percent rise in earnings due to the tax cut, the top 1,000 firms would enjoy a P105-billion increase in their combined net profit,” Atienza said.
“We are hopeful that firms will use most if not some of the new money to provide superior compensation to their employees,” he said.