Fiscal Incentives

Opinions Unlimited

by Atty. Tony(APA) Acyatan (Atty. APA – chairman of Acyatan & Co., CPAs-DFK International is president of PICPA in 1990 and ASEAN Federation of CPAs (1998-2000) and Accountancy Hall-of-Famer (2006).

E/P ZONES: In line with the global approach of inviting foreign investors – many countries, including the Philippines – have established export processing zones.  Businesses locating in the zones are given fiscal incentives – more especially tax holidays for some limited years. These EPZs are intended to stimulate domestic economies with the entry of foreign investments that will manufacture or process products for (FX-earning) exports.

The other purpose is the creation of employment for local labor.  The workers may earn money that improves the local consumers’ purchasing power. Unfortunately, employment opportunities for workers in the zones are mostly on “tempos” basis.  The usual tenure of appointment for EPZ labor is just five (5) months! Obviously, this is intended to avoid permanency.

LOST REVENUES:  The grant of fiscal incentives for the foreign investors locating within the export processing zones reduces tax collections.  There are many EPZ locators that continually report Net Losses.  Availing of their tax incentives, these losses are carried over by the locators into their taxable periods of operations.  The tax purpose of inviting investments is nullified.

This is the probable reason why Finance Secretary Cesar Purisima has expressed his proposal to stop the creation of export processing zones.  The department of Trade and Industry is  not opposing the move.  This is an example of how the various executive departments can jointly work on a nationwide economic objective – without impairing the services they swore to deliver.

WEALTH:  Costs and returns on money investments have been very low – and are continuing to spiral down.  The cause is excess money supply – which surprisingly, has not caused any upsurge in our inflation rate.  Opinions Unlimited explains the reason.  The big portions of our financial wealth are held by a small segment of our population.  Conversely – the greater mass of people are sharing a very meager chunk of our money supply.

Obviously – our lower-class and middle-class populace do not have enough consumer spending power.  The situation is unhealthy and could lead to deadly clashes between the rich and the poor. If the P-Noy administration wants peace and security for the greater mass – the ranks of the middle class must be upgraded and expanded that leads to improvement of our national savings rate.

AGRICULTURE:  Like most of the cabinet secretaries, Agriculture Secretary Prospero Alcala has a big load of responsibility on his shoulders. Among these is how to reduce our dependence on imported rice. We devote big areas of agri-lands to rice-farming – and yet, the Philippines is the world’s biggest importer of rice.  Not only do Pinoys eat more rice; our country’s palay production is gravely insufficient for our needs.

Infestations of both traditional and value-crops farms is one recent problem.  Corn production for animal feeds is still wanting in the Luzon mainland.  Non-chemical fertilizers need to be processed for eco-friendly farm production.  The Quezonian agri-boss should hire experienced technical and administrative assistants.  His personal work ethic of working from dawn to dusk spells peril for his life and health.

EPISTLES:  Godly living means no regrets about yesterday, no embarrassments on today; and no schemes for tomorrow.

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