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Friday, August 25, 2006
Business groups caution gov’t against incentive cuts
The government has assured exporters in Cebu that whatever fiscal incentives they are currently enjoying will remain even when Senate approves the bill on the Rationalization of Fiscal Incentives.
“The fiscal incentives on exporters will remain on status quo. The government is willing to give incentives to companies that give us (country) dollars,” Rep. Joey Salceda, economic adviser to the President, said during a business forum organized by the Mandaue Chamber of Commerce and Industry.
Exporters, under the Export Development Act of 1994, enjoy incentives like income tax holidays, exemptions to tax and customs duties on capital equipment and spare parts.
Importance
In an interview, Philippine Exporters Confederation Inc. Cebu president Allan Suarez said it is good that the government has recognized the importance of the export industry.
Nevertheless, Cebu exporters have joined other business chambers in calling for government to proceed with caution as regards the passage of the bill.
Mandaue Chamber of Commerce and Industry president Eric Mendoza, also an exporter, said exporters are asking the government to speed up the releasing of refunds related to value-added tax (VAT) paid by exporters, in buying local raw material components.
The refund of VAT payments for locally-sourced raw materials are among the fiscal incentives granted to exporters.
But Mendoza said, based on experience, the refund takes a long time.
The Senate ways and means committee is now in the process of deliberating the proposed bill, which has been approved by the House of Representatives last year.
Salceda said there is an urgent need to rationalize the incentives given by incentive-giving government agencies, such as the Board of Investment (BOI) and the Philippine Economic Zone Authority because the tax incentives are “already going out of hand.”
“Nasobrahan na ang mga incentives especially those given to companies not suitable to receive such,” he said.
Approval
At the Sun.Star Economic Forum held at the Waterfront Cebu City Hotel and Casino last Wednesday, Finance Secretary Margarito Teves said his department hopes the bill will be approved within this session.
He said in an interview that the government aims to channel the taxes that would be collected with the trimming down of tax perks to projects that are significant and permanent, such as roads, power and water that would benefit the entire country in general.
“(There is a need to look into the qualifications for tax perks as there are some circumstances in the past that are not relevant anymore today,” Teves said.
“But exporters should really be given incentives,” he added.
Teves said the Senate may prepare a shortlist of other companies, aside from exporters, qualified for incentives.
In a statement posted online, the Joint Foreign Chambers (JFC) said they support the government’s move. However, they believe the main reasons for the problems of infrastructure and education are the high population growth rate, “leakages” in revenue collection and corruption in government spending.
The statement cited a report prepared by economists at the University of the Philippines and Ateneo titled, “The Case of the Missing Tax Revenues,” which blamed the deteriorating condition of Philippine infrastructure and education on excessive granting of fiscal incentives.
“We urge the government and Congress to proceed cautiously and only after taking time to fully study the potential impact —positive or negative—of the proposed Senate bill,” according to the statement signed by different foreign chambers of commerce in the country as well as the Philippine Association of Multinational Companies Regional Headquarters Inc. (JBN)
For Bisaya stories from Cebu. Click here. (August 25, 2006 issue)
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