Corporate income tax cut to mean big revenue loss

The reduction in corporate income tax from 35 percent to 30 percent next year will mean a revenue loss of P15 billion for the government, Finance Secretary Margarito Teves said.

Teves said that to compensate for the expected dent in revenues, the government will continue to work closely with Congress on legislative tax measures.

“We will continue to work closely with Congress on legislative measures particularly to compensate for the reduction in corporate income tax from 35 percent to 30 percent next year which will result in a P15 billion revenue loss,” Teves said.

The legislative measures include the rationalization of fiscal incentives which hopes to harmonize tax incentives given to investors.

The government will also push for the passage of the measure that would exempt the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) from the Salary Standardization Law.

The government, through Republic Act 9337 or the Expanded Value Added Tax Act of 2005 jacked up the corporate income tax to 35 percent from 32 percent effective Nov. 2005.

Under the law, the corporate income tax rate would go down to 30 percent starting 2009.

The government hopes to balance the budget this year after decades of posting deficits.

Last year, the government was able to trim the deficit to P12.4 billion or way below the programmed ceiling of P63 billion.

For 2008, the BIR has a revenue target of P845 billion while the BOC has a collection goal of P254 billion.