No new taxes should be introduced by the government while businesses are still finding ways to deal with losses wrought by the COVID-19 pandemic, Senator Imee Marcos said.
Marcos, who chairs the Senate committee on economic affairs, said that the government should instead “overhaul” the Corporate Income Tax and Incentives Reform Act (CITIRA) to include “deeper tax reductions, deferrals, and exemptions.”
“New taxes are the opposite of stimulus packages, which have been slow in coming but are what businesses need right now. Payment of tax dues and collection of tax revenues are likely to be difficult at this time,” Marcos said.
“We are trying to prevent a bloodbath, to stem the hemorrhage that is inevitable this year, worldwide. In fact, using the title ‘stimulus package’ is misleading. This is more a rescue package to save lives, jobs, and businesses,” Marcos added.
Marcos expressed relief that the government’s economic managers have opened up to calibrating CITIRA instead of rushing lawmakers to pass it, adding that the most urgent stimulus measure right now is to subsidize payrolls of companies in distress.
“There will be no economic recovery to look forward to if the government does not ensure the survival of workers especially in MSMEs (mirco, small, and medium enterprises) during the pandemic,” Marcos said.
Marcos added that stimulus measures in CITIRA should include an immediate reduction of at least 5% of corporate income taxes.
“In the present version of CITIRA, the slow reduction of corporate income taxes by a mere 1% each year over a 10-year period would be worthless to businesses, considering inflation, currency exchange rates, and other factors through time,” Marcos said.
Marcos also said that the aversion of the government’s economic managers to calling for a suspension of debt payments to international lenders was “out of step with the call of the times.”
“What use is the country’s present BBB rating if we hesitate to bargain or borrow more to shore up the government’s dwindling revenues to fight the pandemic?” Marcos asked.
Marcos noted that credit rating agency Fitch had slightly downgraded the country’s rating just last week from positive to stable, adding that this may dip further if the search for a COVID-19 vaccine takes longer than expected and caution prevents businesses from operating at a higher gear.
“Chasing after an ‘A’ rating by avoiding loans means nothing to a mother who needs to put food on the table for her family. Nor does achieving upper middle-income country status mean anything to farmers who have suffered losses in the past three years,” Marcos explained./Stacy Ang