Corporate tax reform measure hits snag in Congress

MANILA, Philippines — The Duterte administration’s priority legislative measure on corporate tax is moving sluggishly in the House of Representatives.

The Corporate Income Tax and Incentive Rationalization Act (CITIRA) bill has not breezed through plenary deliberations in the lower house, unlike other priority measures like the bill increasing excise taxes on alcohol, tobacco and vape products which hurdled the plenary on the same day it was approved by the ways and means panel.

Despite repeated calls of the President in his past two State of the Nation Addresses for its immediate passage in Congress, the CITIRA bill failed to make it after two consecutive plenary sessions last week characterized by heated debates and amendments.

One of the issues raised during deliberations is the period of transition for the removal of existing incentives for corporations.

Albay Rep. Joey Salceda, chairman of House ways and means committee and vice chairman of appropriations committee, earlier pushed for the immediate passage of the CITIRA bill before Congress devotes its time to deliberation on the proposed P4.1-trillion national budget starting this week.

Salceda suspects that some Cabinet members of President Duterte had something to do with the delay in the passage of the measure.

The senior lawmaker said these executive officials “are sowing confusion, sending wrong signals and, worst, protracting the process and creating unnecessary uncertainties among investors.”

Salceda said they have even used some lawmakers as “mercenaries” to advance their opposition to House Bill 313 or the CITIRA bill that he authored.

“I concede these are honest disagreements but please do not use Congress as playground for your policy battles, or worse, use us as proxies or mercenaries for your skirmishes, because you are all alter egos of one President,” he told the Cabinet officials.

“If you have problems with CITIRA, then settle it with the President or within the Cabinet,” the lawmaker stressed in a statement yesterday.

Salceda did not name names or confirm whether they include officials who have already publicly raised issues with the CITIRA bill like Philippine Economic Zone Authority director general Charito Plaza.

Plaza opposed the measure, citing repercussions of the removal of existing incentives to exporters.

Salceda reminded the Cabinet officials that the measure is a priority legislative program of the Duterte administration.

“In January 2018, or almost 21 months ago, the President decided with the Cabinet to make CITIRA a flagship reform of his administration. In two consecutive SONAs, he appealed to Congress to pass it as a national imperative to make the country more competitive,” he recalled.

He said the bill has undergone “deliberations, consultations, macroeconomic, industry and sectoral studies, thousands of pages of presentations, position papers.”

“Issues have been amply discussed and the space for compromise has been well-explored... CITIRA is good for our country, good for our people and it is the right thing to do,” he pointed out.

“Cabinet members know their options, too. After all the policy noise for almost two years, it is time for them to speak with one voice. We can never perfect legislation but one thing is sure – it is bad to prolong the business uncertainty and the best thing to do is to approve it and allow investors decide on that basis,” he said.

CITIRA bill seeks to reduce the corporate income tax rate from 30 percent to 20 percent for the almost one million businesses while rationalizing incentives for some 4,100 firms that will pay only five percent after five years of paying nothing.

The previous Congress passed the measure. The current House ways and means committee approved the measure last month.