THE country’s new socioeconomic chief said the passage of the pending tax reform bills must still be pursued when the current crisis is over, however they may be tweaked to provide assistance or relief to those who were affected by the coronavirus disease 2019 (COVID-19) pandemic.
Karl Kendrick Chua, National Economic and Development Authority (NEDA) acting secretary, said during the Laging Handa virtual briefing yesterday while there are proposals from business groups to defer the passage of tax bills, he emphasized the need to overhaul the tax system.
“We really need to change our tax system because it has a lot of problems. It is complicated, it is not fair, and inefficient. So when the COVID crisis is over, the Department of Finance (DOF) will study that (tax proposals), and the NEDA will have its input because we have to study the economic impact of each policy,” Chua said.
“But I believe that the Comprehensive Tax Reform (Program) must be pursued, but maybe there will be a bit of changes to help those who were affected by the COVID,” he added.
Chua, who was previously undersecretary at the DOF before he was appointed as acting secretary of NEDA, was dubbed as the poster boy for the Tax Reform for Acceleration and Inclusion Law, the first package of the CTRP. Chua also continued to work for the passage of the other tax packages during his stint at the DOF.
“If we don’t pass the tax reforms… there are a lot of people that needs help and since there are a lot of services that need to be provided, we will have to borrow. But our debts are not free. We may not have to pay it now, but our children and our grandchildren will pay for those, that’s why our decisions whether to borrow money or raise taxes, we need to study that and find the balance,” Chua said.
“Our tax system really needs to be overhauled, because if we don’t do so, we won’t be able to have a simpler, fairer, and more efficient tax system,” he added.
Meanwhile, Carlos Dominguez, DOF secretary, was asked to comment on Chua’s statement that the tax proposals may need to be tweaked to support those who were affected by the COVID-19 pandemic.
“On CITIRA (Corporate Income Tax and Incentives Reform Act), still under study, but one idea worth exploring is the possibility of granting the FIRB (Fiscal Incentives Review Board) the flexibility of tailoring programs to the needs of individual companies,” Dominguez said.
Under the CITIRA, the FIRB will exercise oversight and policymaking powers over the country’s investment promotion agencies, and approve the grant of incentives to qualified activities.
Asked if the DOF is considering to defer the corporate income tax cut under the CITIRA bill, as state revenues are also suffering due to measures needed to suppress the pandemic, the finance chief said: “still under study.”
Under Senate Bill 1357, CITIRA will reduce corporate income tax rates by one percentage point every year from the current 30 percent, to 20 percent by 2029.
