GOVERNMENT SEEN TO LOSE UP TO P15-B A YEAR ON TOURISM PERKS
MANILA, FEBRUARY 13, 2007 (STAR) By Des Ferriols - Preliminary estimates made by the Department of Finance (DOF) indicate that the government would lose between P7 and P15 billion every year in foregone revenues should Congress approve the proposed incentives to the tourism industry.
Expressing alarm at the possibility of losing grip of its fiscal consolidation, Finance officials warned that revenue losses could be even bigger depending on how generous the implementing rules and regulations would be.
Congress is expected to hold its bicameral meeting next week to consolidate the separate bills from the lower House and the Senate, both intending to give special incentives to tourism and tourism-related enterprises.
Finance Undersecretary Gil Beltran told reporters that based on “very preliminary and very conservative” estimates, the revenue hit that could arise from the tourism industry incentive package could run up to P15 billion every year.
“It depends on how tight the definition of terms would be,” Beltran said. “But the safest estimate we could make already points to a substantial revenue impact.”
Beltran said the Senate version of the proposed bill would cause the most damage and the version now being discussed by the lower House was closer to what the DOF wanted.
Beltran expressed worry that government revenues would be eroded even before public spending on infrastructure could take-off and at worst, create new fiscal imbalances.
“The question we have been asking is: why aren’t we getting at least the same tourist traffic as our neighbors,” Beltran said. “Is it because the tourism industry doesn’t have incentives or because people couldn’t get to where they want to go because there are no roads and airports?”
The DOF said the proposed tax incentives for the tourism industry would throw the country’s investment incentives program into a more expensive disarray.
As the Senate passed the proposed bill on third reading last week, finance officials warned that the impending incentives would result in even more complicated incentives at a time when the government is trying to rationalize the package to minimize the impact on revenues.
Beltran said the government has been trying to rationalize the investments incentives program with the end in view of coming up with an omnibus program that would provide uniform incentives for industries classified as “priority”.
The Senate version of the law would offer, among other things, a 12-year income tax holiday to all tourism and tourism-related enterprises that have been registered and accredited by the DOT.
Moreover, tourism enterprises would also be entitled to tax and duty exemption of imported capital equipment as well as other goods actually consumed in the course of services.
Chief News Editor: Sol Jose Vanzi
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