The proposed second tax reform package is expected to create not only more but also better jobs as the government would grant incentives to investments generating employment opportunities, the think tank Action for Economic Reforms said.
“The government’s push to reform the fiscal incentive regime will encourage businesses to hire more people and upgrade the skills of existing workers by building backward and forward industry linkage as among the criteria to qualify for fiscal incentives,” AER senior economist Jo-Ann Diosana said in a statement, noting that the pending bills before the Lower House provided for double tax deductions to be granted to businesses that will hire marginal labor yearly as well as train current employees.
“The rationalization actually intends to have a clear set of criteria as a condition to receiving incentives and one of the criteria is the generation of full-time, regular employment,” Diosana said.
As such, AER said that “the fears raised by some sectors that rationalizing incentives will cause some firms to close shop and kill jobs” was unfounded.
“Majority of firms do not enjoy incentives; those that do are mostly profitable firms that cater to a growing domestic market or are resource-seeking, and therefore would invest in the Philippines regardless of whether they receive incentives or not. These firms are involved in the aviation, mining, housing and gambling industries,” AER pointed out.
In an earlier statement, AER said that it “believes that with enhanced targeting, design and administration, we can make our fiscal incentives regime work better for industry, the economy and the country.”
“We want a level playing field for our investors that is tied to the strategic investment priority programs and will provide fair, just and equal opportunity for our micro, small and medium entrepreneurs,” it added.
Also, the AER said that it proposed a clear set of measurable performance criteria as primary condition to qualify for incentives.
“Aside from the amount of investments, these criteria include generation of full time, regular employment; adoption of inclusive business activities and value-added production; use of cleaner, energy-saving, and other relevant new technology; installation of adequate environmental protection systems; addressing gaps in or moving up the supply/value chain or product ladder; stimulation of forward and backward linkages, and commercialization of ideas and innovation,” it added.
