The House of Representatives is expected to resume this week the plenary discussions on House Bill 4157 or the proposed “Corporate Income Tax and Incentive Rationalization Act” (CITIRA) which seeks to encourage investments by reducing the country’s corporate income tax (CIT) rate from 30 percent to 20 percent. Committee on Ways and Means Chairman Rep. Joey Salceda (2nd District, Albay) and Vice Chairpersons Reps. Estrellita Suansing (1st District, Nueva Ecija) and Sharon Garin (Party-list AAMBIS OWA) delivered their sponsorship speeches last week. Salceda said that essentially, the measure, if enacted into law, will lower the CIT by one percent per year for 10 years, from the present 30 percent. With this, Salceda said domestic companies are expected to produce here rather than abroad. The measure will also provide additional revenues to responsible corporate partners every year. Assuming they reinvest 50 percent of the tax savings arising from CITIRA, then this will produce 1.1 million jobs between 2020 and 2029, according to Salceda. Finally with CITIRA, he said there will be a 3.9 percent GDP growth per year while inflation will be tamed to point nine percent. “This is the biggest of all the packages that will essentially expand the capacity of the economy because the State accounts for only 21 percent of GDP while the private sector actually accounts for 79 percent. And therefore we are transferring the dynamism of growth. While the government has been committed to provide public goods essentially infrastructure, now it is time to incentivize, to provide our domestic private sector the means in order to respond to the programs of the national government,” Salceda said. The bill is principally authored by Reps. Horacio Suansing Jr. and Estrellita Suansing. In her sponsorship speech, Suansing said the CITIRA bill is envisioned to make the country’s economy more resilient, vibrant and cohesive. Suansing said the principal objective of HB 4157 is to make the CIT system simpler, fairer and more transparent. It seeks to gradually lower the income tax from 30 percent to 20 percent for businesses. “By lowering corporate income tax, businesses, especially small and medium enterprises, will improve and this will ultimately encourage robust business activities, more investments and more importantly, tax compliance. For the past 50 years, the country has been overly generous in giving special treatment to some investors who have enjoyed this special status,” Suansing said. Garin said the Philippines has the biggest CIT rate in the Asian region. She said Cambodia, Thailand and Vietnam managed to give 20 percent income tax; Singapore, 17 percent;. Malaysia and Laos, 24 percent; and giant countries China and Indonesia, 25 percent. In lowering the CIT, Garin said the foregone revenues in the long run will be offset through rationalized and simplified tax incentives to the well-deserving investors. Among the expected results of lowering the CIT will be the creation of more jobs, high income for every Juan dela Cruz, reduced poverty among rural and urban areas, and a strong national economy, she said./ Caption by Rowena B. Bundang/ Photos by Perfecto Camero/ News and Documentation Section-Press and Public Affairs Bureau/ House of Representatives of the Philippines
