To expedite the country’s post-pandemic economic recovery, Sorsogon Governor Chiz Escudero said the government should consider giving micro, small and medium enterprises (MSMEs) more time to pay their taxes.
Escudero, who is seeking a fresh term at the Senate, said Congress should enact a law that gives direct financial assistance to MSMEs, as is the practice in other countries, and allow a tax payment term of up to five years.
“Para makabangon tayo mula sa pandemiya, dapat magpasa ang susunod na Kongreso ng batas na tutulong sa MSMEs. Sa papaanong paraan? Halimbawa, bigyan ng rektang ayuda katulad ng ginawa ng ibang bansa para may pang-suweldo sila ng 6 hanggang 12 buwan. Kapag may suweldo ang empleyado, iikot ang ekonomiya sa kanilang lugar,” he said.
“Bigyan sila ng palugit kaugnay sa pagbabayad ng buwis—tatlo hanggang limang taon, pwede nilang hulug-hulugan ang pagbabayad ng buwis,” the veteran legislator said.
MSMEs comprise 99.51% of the of 957,620 business enterprises operating in the country in 2020, according to the Philippine Statistics Authority (PSA). Of these, 952,969 are MSMEs and 4,651 (0.49%) are large enterprises. Micro enterprises account for 88.77% of MSMEs.
“Lahat ng ihahalal natin sa darating na ika-9 ng Mayo, ang dapat tutukan ay isang bagay lamang—ang muling pagbangon at pag-ikot ng ating ekonomiya para yung mga negosyong nagsara, ‘yung mga trabahong nawala ay muling bumalik,” Escudero, who once chaired the Senate Committee on Finance, said.
“Kung matulungan nating bumangon ang MSME, para nating napabalik na rin ang 99 porsyento ng ating ekonomiya,” he said.
In 2021, Congress passed Republic Act 11534 or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, which reduced the income tax of domestic MSMEs from 30% to 20%, provided that the MSMEs have a taxable income of not more than Php5 million and total assets of not more than Php100 million.
CREATE Act is touted as the largest fiscal stimulus for businesses in the country, providing private enterprises over Php1 trillion worth of tax relief in the next 10 years. The Department of Finance said MSMEs will be the biggest beneficiaries of the law because of “largest ever corporate income tax rate reduction in the country.”
Escudero said that aside from tax reduction, MSMEs need a tax payment extension to give them some fiscal space to recover and regain their income after the pandemic. A tax extension would allow them to invest their money in business instead of using it to pay taxes lump-sum.