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| Inquirer photo |
The Trade Union Congress of the Philippines (TUCP) said the proposed P500-million government aid for workers that may lose their jobs due to the Corporate Income Tax and Incentives Rationalization Act (Citira) is “too small.”
“The P500 million yearly budget for Citira-displaced workers is highly insufficient compared with the day-to-day expenses amid rising cost of living created by the TRAIN [Tax Reform for Acceleration and Inclusion] law,” said TUCP President Raymond Mendoza in a statement.
Albay Rep. Joey Salceda said the amount will be used for the skills training of the affected workers. Salceda said last month that the money is not needed as the passage of Citira will not result in job losses.
A business group estimated over 700,000 workers will be retrenched if the Citira bill is enacted as it will remove fiscal incentives in economic zones in exchange for lower corporate income taxes (CIT).
Government officials are mum on the possible displacement of workers following the passage of the bill, but they said the measure will generate 1.5 million in “net employment.”
The TUCP criticized the administration for its “cavalier response” to the issue, which could affect the employment of thousands of workers.
“Our white-collared [Department of] Finance people are again deliberately playing dice on the lives of workers and their families by dangling an annual budget provisions for displaced workers and by sugarcoating Citira with a million jobs it will supposedly create,” Mendoza said.
He called on the government to conduct more public consultations, which should include labor groups, before the measure is approved by Congress.
Mendoza said issues that should be clarified during the consultations are the budget that should be allocated for workers that may be displaced by Citira as well as the number of companies and workers that may be affected by the measure.
The TUCP said the administration should come up with a “genuine transition program” for the affected workers.
‘Wider income gap’
The Freedom from Debt Coalition (FDC) said the Citira bill, formerly known as the Trabaho (Tax Reform for Attracting Better and High-quality Opportunities) bill, will worsen inequality in the country.
FDC said the government is giving businesses a tax gift in the form of the reduction in corporate income taxes. This is “regressive taxation” which punishes the poor who pays more due to the value-added tax (VAT) law and the TRAIN law.
This will increase inequality in the Philippines where the country’s Gini coefficient is already at 0.4439 as of 2015, according to the Philippine Statistics Authority. The Gini coefficient is a measure of inequality where zero indicates perfect equality and 1, perfect inequality.
“As it is, the top 50 corporate families have wealth equivalent to .0000021 percent of the aggregate wealth of the 23 million families. The Philippines is clearly one of the most unequal societies of the world. With Citira, inequality will deepen further,” FDC Executive Director Zeena Bello Manglinong said in a statement.
Manglinong said the Department of Finance’s own data showed that the country loses P300 billion annually from foregone corporate income taxes.
FDC said Citira provisions on the reduction of CIT are “unnecessary and archaic, quick-fix scheme such as tax competition.”
It added that the claim of the government that the country’s CIT is the highest in the region is “inaccurate.”
“FDC research also shows that some claims of the government are not exactly accurate. Vietnam’s CIT is at 20 percent, but what is often failed to be mentioned is that this is merely a floor rate. Vietnam’s CIT rate goes as high as 32 percent to 50 percent, especially for oil, mining and gas companies,” the group said.
However, FDC said it agreed with the Citira provision of removing perpetual incentives to companies.
While fiscal incentives should not be forever and must be “performance-bound and time-bound” as well as “efficient,” the group said Citira’s “foreign direct investments-financed development paradigm” remains “dangerous” to the economy.
This, FDC said, must be replaced by one that is based on “high value-added, technology-enabled manufacturing and services sectors.”
“The Freedom from Debt Coalition believes that the way forward is an industrial policy that purposely builds up the capacity of domestic firms to develop and compete,” FDC said.
“This must also mean that our method of taxation must also follow suit. We cannot pretend that technocrats in government have the sole solution to issues plaguing our country. It is time that we step forward with an alternative,” it added. - By Samuel P. Medenilla & Cai U. Ordinario
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