Recto wants ‘progressive’ corporate tax rates under CREATE

Senate President Pro Tempore Ralph Recto on Tuesday proposed that corporate tax rates under the Corporate Recovery and Tax Incentives for Enterprises (CREATE) bill should not be uniform for all.

This bill, certified by President Rodrigo Duterte as urgent, seeks to outrightly reduce the corporate income tax rate from the current 30 percent to 25 percent.

During the period of interpellations, Recto said if individual income taxes are not all the same, the tax schedule for corporations shall also be varying depending on income or assets of firms.

"Why should a micro enterprise and a large enterprise pay the same rate? Why can't we adopt two, three, four, maximum of different rates?" he said.

"If we adopt a single rate lang, it benefits kasi the large guys eh. If we adopt a more progressive rate, then it benefits more MSMEs [micro, small, and medium enterprises] who need it most," he added.

Recto said he has two models in mind: a progressive tax rate that is based on basic income or another one that is based on assets.

"Halimbawa, P3 million and below 'yun ang definition natin ng micro, basta P3 million and below ang tax rate mo 10%; kapag ang asset mo P3 million to P15 million, ang tax rate mo 15%; kapag ang asset mo P15 million to P100 million, ang tax rate mo 20%; kapag ang asset mo P100 million and above, 25%," he said.

"I think it's time has come for the Philippines considering the challenges we are faced under the pandemic and social inequality in all its forms today," he added.

Further, the former National Economic and Development Authority chief said putting this progressive tax schedule in place through CREATE would also help establish a clear database of businesses in the country.

"It's equitable and then you are equipping the government [with] more information, more data for planning purposes moving forward," Recto said.

Senate Ways and Means Committee chairperson Pia Cayetano said she is amenable to explore the said proposition and is willing to look into it as a possible amendment.

Recto is the second to the last interpellator for the CREATE bill. Senate Minority Leader Franklin Drilon is scheduled to ask questions on Wednesday.

The senators are planning to approve the measure on third reading before Congress goes on break next week. — BM, GMA News