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Wednesday, April 20, 2005
PCCI hits Senate plan to raise corporate tax
DESPITE the support shown by the Philippine business community to tax reform measures of the Arroyo Government, the Philippine Chamber of Commerce and Industry (PCCI) opposes the increase in the corporate income tax rate to 35 percent from 32 percent as proposed by the Senate.
"An increased corporate tax will create a very bad impression on investors,” said PCCI president Donald Dee.
“Companies might have difficulty absorbing the additional costs. We cannot just adjust the cost or selling price of our goods and services and pass them on to our consumers. Everything already has VAT (value-added tax) on it," he explained.
In the wake of the high crude oil prices, Dee also recognized the double burden on consumers, who will have to pay for the series of increases in prices of petroleum products and shoulder the VAT imposed on those products.
"I wish we could (go) back (to) the time when we could pass everything on to the consumers. But times have changed, and the market has become very competitive. That's why we cannot just raise prices," he said.
Approved
The Senate approved on third and final reading last Wednesday night its version of the VAT bill. It retains the 10 percent VAT rate and lifts exemptions on domestic airlines and ships; professionals, such as doctors and lawyers; and power and petroleum products.
So-called socially sensitive goods, such as books and medicines, and agricultural products, such as raw fish, meat, vegetables and palay, remained exempted from VAT.
As for the corporate income tax rate, the 35 percent will be good only until 2009, after which the rate will revert to 32 percent.
The government expects to generate P50 billion from the expanded VAT bill. But government officials said if collection will be efficient, at least P60 billion can be generated.
Dee believes that the success of the tax reform measures will depend on the implementation of the law and how the money collected will be spent. (Sunnex)
(April 20, 2005 issue)
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