THE Senate approved on third and final reading Monday a bill that would promote transparency and accountability in the grant and administration of tax incentives to business entities, individuals, and corporations.

Senator Juan Edgardo Angara, Senate committee on ways and means chairman, said Senate Bill (SB) 2669, or the proposed Tax Incentives Management and Transparency Act (Timta), will provide a solution for the lack of empirical data on fiscal incentives, thus, enabling the government to "evaluate and maximize revenue spent towards boosting the country's economic growth."

Senate President Franklin Drilon said the main purpose of the bill is to "make public and let the sun shine on the tax incentives which companies enjoy."

"There should be transparency on the taxes that we are not collecting and waiving in the form of incentives granted to the private sector so that we will see whether indeed, the public is best served by these incentives being granted to them," Drilon said.

Under the bill, there will be a creation of Tax Incentives Information (TII) section in the annual Budget of Expenditures and Sources of Financing to monitor tax incentives.

According to the Department of Finance (DOF) report, the total amount of tax expenditures for investment incentives in 2011 reached P144 billion, covering 1.5 percent of gross domestic product, nine percent of actual government spending and 11 percent of government revenues the same year.

In the form of TII report, the investment promotion agencies (IPAs) and other government agencies (OGAs) are subject to submit an annual report which will include tax incentives claims, as reflected already in the tax returns of business entities, private individuals, or corporations.

Angara said the bill will mandate DOF to submit to the Department of Budget and Management the following data: actual amount of tax incentives availed by registered business entities, estimate claims of tax incentives immediately preceding the current year, programmed tax incentives for the current year, and the projected tax incentives for the following year.

The bill will also establish Tax Incentives Tracking Program of all tax incentives to monitor the incentives granted and will set up stringent reportorial scheme to the President and to Congress.

The said program will be administered by the DOF and bureaus of Internal Revenue (BIR) and Customs (BOC) to monitor tax incentives granted by the IPAs and OGAs, to project tax incentives for future years, and to conduct an annual evaluation study to determine the impacts of the tax incentives on the Philippine economy.

Likewise, the bill mandates the annual conduct of cost-benefit analysis by the National Economic and Development Authority (Neda) on investment schemes incentives by empowering the agency to collect and evaluate tax incentives data collected from the reports of the DOF, BIR, and BOC.

Investment-related data like lists of registered business entities, investment projects, investment cost, actual employment and export earnings will also be collected and evaluated by Neda.

"The Neda's cost-benefit analysis would allow policymakers to make better decisions in crafting or revising laws, overseeing the implementation of existing investment-related laws, and managing the nation's finances," Angara said.

Senate President Pro-Tempore Ralph Recto, for his part, allayed fears that the measure will tamper the fiscal incentives presently enjoyed by the private sector and stressed that Timta should instead focus on promoting transparency and accountability.

"The bill will not appropriate tax incentives availed; it merely requires that they be accounted for. It does not rescind nor recall any investment perk; ir just obliges companies and the government to record and report the same," Recto said.

The bill suggests that "nothing shall be construed to diminish or limit, in whatever manner, the amount of incentives that IPAs may grant, pursuant to their charters and existing laws."

Instead of diminishing the powers of IPAs to grant incentives, Angara said the proposed measure was pushed to "strengthen the belief and confidence of investors and business in the government's ability to set a clearer and more efficient supervision of fiscal incentives."

"This way, we will convince them to invest more and bring more businesses to our country, thus, providing more opportunities and jobs for our countrymen," Angara said.

The proposed measure is one of the two key economic reform bills -- along with the Fair Competition Act -- that the Senate and the House of Representatives agreed to pass before their session adjourns on June 10.

SB 2669 was authored by Drilon, Angara, and Recto while its counterpart version, House Bill 2492, was filed by Representatives Maria Leonor Robredo, Gabriel Quisimbing, Christopher Co, Rodel Batocabe, Victoria Noel, Ging Suansing, and Angelina Tan. (Sunnex)