Finance Undersecretary Karl Kendrick Chua maintained that the CITIRA bill would create 1.5 million jobs, contrary to the claim of the JFC that it would lead to 703,000 in job losses.
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JFC told to back up CITIRA job loss claims
Mary Grace Padin (The Philippine Star) - October 1, 2019 - 12:00am

MANILA, Philippines — The Department of Finance (DOF) has challenged the Joint Foreign Chambers (JFC) of the Philippines to back their claims on the estimated job losses due to the Corporate Tax Income and Incentives Rationalization Act (CITIRA).

In a statement, Finance Undersecretary Karl Kendrick Chua called on the JFC to “look more closely” at the proposed CITIRA bill, “instead of prematurely fretting over imagined job losses.”

Chua maintained that the CITIRA bill would create 1.5 million jobs, contrary to the claim of the JFC that it would lead to 703,000 in job losses.

“Our numbers are transparent. Companies will reasonably invest at least 50 percent of their additional money from the reduction of the corporate income tax rate (CIT) rate in growing their business. This will mean more jobs – a total of 1.5 million jobs actually. Moreover, the new menu of incentives for investors, as proposed in CITIRA, will also encourage job creation and upskilling,” Chua said.

Chua then called on the members of foreign chambers to be more transparent in how they calculated the supposed job losses, and provide the names of the companies and the number of jobs to be affected in each company.

“We hear them. We have been listening to them and asking them in almost every meeting for two years now to give us more details on what kinds of jobs they are referring to, in which industries, and in which areas of the country, so we can help,” Chua said.

“Secretary Lopez of the Department of Trade and Industry (DTI), who chairs both PEZA (Philippine Economic Zone Authority) and BOI (Board of Investments), already said that we are open to continue supporting footloose industries. So why won’t they give us more details on their claims? Their lack of transparency is a little bit suspicious; don’t you think?” he said.

In addition, the DOF undersecretary also asked the JFC if it has included in its calculations “the jobs that will be created when JFC member-companies are able to expand using the savings from a lower corporate income tax rate.”

“I surmise that many members of the JFC-affiliated chambers are actually companies paying the regular rate. They will benefit from a lower regular corporate income rate. I hope these companies were consulted and considered by their leadership. We must remember that this reform must be treated as a package. We cannot pursue one aspect, which is the reduction of the CIT rate, without pursuing the other, which is the modernization of the fiscal incentive system, if we want to be fiscally prudent,” he said.

Chua also urged JFC members currently receiving incentives to calculate what they stand to gain from CITIRA.

CITIRA contains Package 2 of the Duterte administration’s Comprehensive Tax Reform Program. It seeks to lower the corporate income tax rate from 30 percent to 20 percent, while rationalizing fiscal incentives to make them more performance-based, time-bound, targeted and transparent.

The bill was approved by the House of Representatives last Sept. 13 and is currently undergoing deliberations at the committee level in the Senate.

Chua said that the bill would maintain the one-stop shop functions of the investment promotion agencies (IPAs), contrary to the concerns of some industries.

“So I am not sure why the leaders of some foreign chambers want to keep the present system that incentivizes profit, rather than incentivizing the behavior that directly benefits the Filipino people. Creating jobs and ensuring that our citizens are prepared for the employment demands of the future are the highest priorities of this reform,” he said.

CITIRA DEPARTMENT OF FINANCE JOINT FOREIGN CHAMBERS
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