THE Department of Finance (DOF) is open to having the proposed reduction in corporate income tax (CIT) rates done faster than scheduled, to provide some relief to businesses as they recover from the impact brought by the coronavirus disease 2019 (COVID-19) pandemic.
“We are willing to look at it and most likely cut it further more quickly than originally planned,” Carlos Dominguez, DOF secretary, said in a press briefing at the DOF office in Manila yesterday, referring to a question on the reduction in the CIT proposed under the Corporate Income Tax and Incentives Reform Act (CITIRA).
Dominguez earlier said he will continue to push for the immediate passage of the CITIRA pending in the Senate, as it could act a stimulus to the economy, especially given the impact of the coronavirus pandemic.
“We are going to push the CITIRA bill very hard because, actually, the big part of the CITIRA bill which nobody talks about, is a reduction in taxes, and in that way we are prepared to help everybody across the board, by reducing their corporate income taxes, so that I think could be a big stimulus to the economy,” he earlier said.
Under Senate Bill 1357, CITIRA will reduce CIT rates by one percentage point every year from the current 30 percent to 20 percent by 2029.
SUPPLEMENTAL BUDGET
Meanwhile, Dominguez said the executive is being “very careful” about requesting for a supplemental budget from Congress, given also the reduction in collections amid the enhanced community quarantine (ECQ).
“We have been very careful about asking for supplemental budget because actually we don’t have supplemental revenue, so we will strive to live within the P4.1 trillion budget this year and so far we’ve been okay,” Dominguez said.
“It’s difficult because we have to reallocate from past priorities to new priorities but that’s the reality of the situation. We are reviewing our budgets for 2021 and to see how this will proceed,” he added.
Dominguez however said not all the projected revenue is lost, as the collection has only been postponed.
It can be recalled that the Bureau of Internal Revenue extended the deadline for the payment and filing of tax returns as the ECQ limits movement of taxpayers.
“You have to remember, that is not lost. That is only postponed. Because if you remember, taxes due on April 15 which was postponed to a further date, those taxes are for income earned last year. So we should still have a hefty collection. That will still be hefty. It’s just postponed,” Dominguez said.
However, he said the excise taxes collected from “sin products” during the ECQ period has been “really bad.”
“Like for instance, for cigarettes, there’s no manufacturing for domestic cigarettes, only for export. Cigarettes, around P14 billion a month, that one is down. The excise tax on alcohol is also down. It is quite serious and of course demand has been very low. And we also have relatively weak collection on sugary drinks tax. So those are going to be quite low,” Dominguez said.
Since additional funding for Universal Health Care also comes from sin taxes, Dominguez said the government will have to review its figures.
“We will basically have to review again the projections of PhilHealth and we will have some proposals on that. Because the expenditures of PhilHealth is also going up because of this COVID-19. We have to measure both sides, the additional expenditures and lowering revenue,” he said.
FINANCING
Meanwhile, Dominguez said the government is still continuing negotiations for financing packages from three multilateral agencies.
“We are making very good progress with the Asian Development Bank, the World Bank, and the Asian Infrastructure Investment Bank,” Dominguez said.
“On the bilateral, we are still continuing with the project-based bilateral financing as committed by Japan, Korea, and China, so we are continuing with that. In fact, there’s also some bilateral financing available from France, of I think around $200 million or $300 million,” he said.
He noted the bilateral financing deals are in the “very early stages,” thus it would still be “too early to tell” how much can be borrowed from them.
Dominguez also said during the briefing the estimated budget deficit for the year could be “around a trillion” pesos.
The DOF said earlier the deficit requirement for 2020 is estimated at P990.1 billion brought about by the pandemic’s economic fallout.
