Plaza laments Lopez's failure to defend PEZA's incentives as gov't pushes CITIRA
Philippine Economic Zone Authority (PEZA) Director-General Charito Plaza lamented on Thursday the apparent failure of Trade Secretary Ramon Lopez to defend PEZA incentives and programs amid the administration's move to push for the passage of Corporate Income Tax and Incentives Rationalization Act (CITIRA).
In a statement, Plaza urged the government to retain the "globally competitive" PEZA's exporters' and ecozone developers' "tried, tested and proven incentive package."
Asked if Lopez supports PEZA's stance to exclude PEZA locators in the CITIRA bill, she told the Manila Shimbun in a text message: "DTI Sec(retary) as chairman of the PEZA Board seem(s) not to understand our incentives and follow in toto the DOF’s (Department of Finance) version and did not speak to defend PEZA’s incentives and programs in the Cabinet."
According to the DOF, CITIRA, which is the Package 2 of the Comprehensive Tax Reform Program (CTRP) of the government, aims to energize micro, small and medium enterprises (MSMEs) by gradually reducing the CIT rate from 30 percent to 20 percent.
The bill also seeks to reform the fiscal incentive system to make it performance-based, targeted, time-bound, and transparent.
Finance Secretary Carlos Dominguez III has said the proposed CIT cut and rationalization of incentives would boost MSME growth because under the current corporate taxation system, a select group of 3,150 corporations registered under investment promotion agencies (IPAs) enjoy discounted effective CIT rates of 6 to 13 percent while small and medium-sized businesses, which employ a majority of Filipino workers, pay the regular tax rate of 30 percent, which is the highest in the region.
PEZA is one of the seven IPAs in the country monitored by the Philippine Statistics Authority to determine foreign direct investments pledges in the country.
Plaza earlier said PEZA locators have been planning their "exit plans" if the current incentives would be removed under the proposed CITIRA.
"What is there to tax for if our existing investors will leave us and no new investors will believe on us anymore because we keep on changing the rules and policies even those that are attractive and are working?" she said.
"Let us not be arrogant but, humble to admit that our government cannot afford to give jobs to all our people nor develop the million of hectares idle lands? How can we eradicate our being import-dependent nor establish food security and provide the basic needs of our people and continue to fight our own people because of poverty, neglect, abuse who became rebels and insurgents for lack of jobs and livelihood opportunities and our people continuously living in fear and discomfort?" the PEZA chief added.
She admitted there were efforts by some to try to "silence" her being the only government official opposing CITIRA as far as PEZA investors are concerned.
"Actually because I'm the only vocal to protect our industries, they look at me as the pain in their necks so they want to silence me? When the President (Rodrigo Duterte) asked me what job I want, I said it’s not the job but, I want to share my knowledge and experiences to make his administration successful and our people’s lives uplifted!" Plaza said without naming those who want to silence her.
"They say coz I'm a government official, so I must support CITIRA! But it’s our incentives and investors that are hit by this major incentives revamp, so who else will speak to defend our programs/ incentives which are globally competitive, tried, proven and tested! If you ask our investors the reason they are here is because of our incentives since we're behind in other efficiency factors like infrastructures, transportation and costly logistics services, high power rate, etc," she added.
Plaza said PEZA contributes 85 percent of export income on service and 65 percent of commodity export income and "high dividends to the national government" and "high income" to host local government units.
She urged the lawmakers, particularly the senators, "not make it complicated by testing projections of income and tax estimates which may not happen and yet, will destroy our credibility and image in the international community as an investments location!"
The CITIRA bill was approved on second reading by the House of Representatives. Celerina Monte/DMS