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Non-Investment-Related Tax Incentives (NITIs): A Policy Paper

Author

Listed:
  • Renato E. Reside, Jr.

    (UP School of Economics, Diliman, Quezon City)

  • Ruperto Alonzo

    (UP School of Economics, Diliman, Quezon City)

Abstract

This Note analyzed non-investment related tax incentives (NITIs)--tax mitigation instruments geared toward enhancement of social values from promotion of education, arts, and science, to assistance of charitable institutions, non-government and non-profit organizations (NPOs) and cooperatives and grant of tax privileges to individuals.It found that governmentÂ’s largest NITI fiscal exposures were to NPOs, seniors' VAT exemptions and cooperatives. NITIs were subjected to rigorous economic efficiency criteria. Philippine standards, norms, practices, rules and laws for NITIs were compared with international best practice and were found wanting. Institutional shortcomings in NITI administration and tax system were pronounced--aggravated by a lack of thorough audits of NPOs and cooperatives by regulators and absence of agency coordination in implementation and monitoring of NITIs. The resulting nontransparency gives rise to mis-targeting of subsidies and taxpayer abuse (money laundering by taxpayers, given the lack of oversight over many foundations). The Note concluded by offering stakeholder recommendations.

Suggested Citation

  • Renato E. Reside, Jr. & Ruperto Alonzo, . "Non-Investment-Related Tax Incentives (NITIs): A Policy Paper," PCED Policy Notes, Philippine Center for Economic Development.
    • Handle: RePEc:phs:pcedpn:201305
    as

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    File URL: http://www.pced.gov.ph/wp-content/uploads/2014/03/Policy-Notes-5_rev2.pdf
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    References listed on IDEAS

    as
    1. Glenn Jenkins & Chun-Yan Kuo, 2004. "Tax Expenditures In The Dominican Republic," Development Discussion Papers 2005-01, JDI Executive Programs.
    2. Renato E. Reside Jr., 2006. "Towards Rational Fiscal Incentives (Good Investments or Wasted Gifts?)," UP School of Economics Discussion Papers 200601, University of the Philippines School of Economics.
    3. Hana Polackova Brixi & Christian M.A. Valenduc & Zhicheng Li Swift, 2004. "Tax Expenditures--Shedding Light on Government Spending through the Tax System : Lessons from Developed and Transition Economies," World Bank Publications - Books, The World Bank Group, number 15067, December.
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