House leader seeks accounting of tax incentivesto private individuals and firms
A House leader is pushing for more transparency in the present system of grantingincentives through the creation of a Tax Expenditure Account (TEA) in the annual national budget to reflect the amount of tax incentives granted by the government to privateindividuals and corporations.Rep. Jocelyn Limkaichong (1
District, Negros Oriental), chairperson theCommittee on Appropriations, raised the proposal noting the present system of accountingfor tax expenditures in the General Appropriations Act (GAA) only includes tax incentivesgranted to National Government Agencies and Government-Owned or -ControlledCorporations (GOCCs).“The bulk of tax incentives which are those granted to private individuals andcorporations are not accounted for. Hence, the magnitude of these incentives remainslargely unknown. The proposed measure aims to address this serious information gapwithout posing additional administrative burden to investors,” said Limkaichong.She further said it is critical to instill transparency in the system of tax incentives inline with the Aquino administration's battle cry of open and good governance.“Transparency is a factor in creating a better fiscal and investment environment. Itempowers all stakeholders-- the government, the business sector and civil society ingeneral-- by allowing for greater public scrutiny of the government's actions, which in turnenhances the certainty and predictability of government policy formulation andimplementation,” she said.House Bill 6785 or the proposed “Tax Incentives Management and TransparencyAct” provides it is the declared policy of the State to promote fiscal prudence andtransparency in the proper management and grant of tax incentives by developing meansto measure the government's fiscal exposure from these expenditures to enable thegovernment analyze the fiscal cost and optimize the economic impact and benefit of suchincentives.It provides that in terms of accounting and claiming of tax incentives, the amounts pertaining to tax incentives administered by Investment Promotions Agencies (IPAs) andother government agencies to private individuals and corporations, and specified inaccordance with a schedule to be prepared by the Department of Finance (DOF), shall betreated as both revenue and expenditure of the General Fund.
NR # 3000JAN. 30, 2013