House committee approves ‘TRABAHO,’ a substitute bill to TRAIN-2
The House Committee on Ways and Means has approved the substitute bill for the Tax Reform for Acceleration and Inclusion (TRAIN) package two, dubbed as the Tax Reform for Attracting Better and High-quality Opportunities or TRABAHO.
In the deliberations held on Tuesday attended by officials from the Department of Finance (DOF), and Bureau of Internal Revenue (BIR), and other resource speakers, the committee asserted implementing provisions which will supposedly make the country business-friendly and at the same time, enhance employment.
“Wala na pong TRAIN 2, TRABAHO na po ang tawag dito, ang goal ho nito ay to create jobs by attracting the right set of investments through incentives,” Committee chair Rep. Dakila Cua said in an ambush interview after the hearing.
Dakila also said that under TRABAHO, the country’s incentive regime will be modernized and corporate income taxes (CIT) will be reduced.
“Generating better opportunities for Filipinos has always been our primary objective in this exercise […] We are also lowering the burden on businesses so that they can expand and provide more employment opportunities,” he explained.
The bill targets to lower CIT by going down two percentages from the current base of 30 percent CIT per year, starting in 2021. It envisions a 20 percent CIT by 2029.
However, DOF Undersecretary Karl Chua admitted during the hearing that the lowering CIT per two percentages would cost government by at least P60 billion — a staggering P26 billion in today’s money, disregarding inflation, per percentage.
“If we go down from 30 to 28 percent in 2021, the loss is P62 billion,” Chua told Rep. Miro Quimbo. “Actually P26 billion in today’s money, or P30 billion if we adjust for some inflation, so yes, around P31 billion per one percent.”
But if it were for businessmen, the lower CIT rates should be initiated as early as 2019, and not 2021.
“We are a bit disappointed that the delay in the start of corporate income tax reduction […] we would have liked it to come into effect more quickly like the personal income tax, by 2019,” said Julian Payne of the Canadian Chamber of Commerce, who was also a resource person of the committee.
‘Biased’ incentive regimes
Cua said, with TRABAHO, which they claim to be in line with the president’s vision of reviewing and modernizing the incentives regime, priority will be given to less-developed areas.
“We are moving to an incentives regime that is biased to development outside of metro or urban areas,” he said.
However, he also allayed fears that the country’s economic direction is disregarding the role and effect of Metro Manila’s industry by having “biases” to non-urban areas.
“We put a special bias na kung ang investor ay pupunta outside the urban areas, mas mahaba yung incentive package. Gusto natin mapa-lago din ang ating countryside,” Cua said.
“Not that we are depriving Metro Manila. Kasi Metro Manila already has the investments. Meron pa rin namang incentives,” he added.
Cua also assured that the incentives would not be abused by the companies, saying that the government would not help and gift companies who are being a burden to the country.
“Kapag ang isang kumpanya naman ay hindi narin kumikita at hindi narin lumilikha ng trabaho at umaasa nalang sa incentives para mabuhay then hindi naman siya masyadong nakakatulong sa ating ekonomiya at hindi rin nakakalikha ng trabaho,” he said.
“Bakit naman isusubsidize ng gobyerno ang expense ng isang company hindi rin naman nakakacontribute?” he asked. “‘Yon yung magkakaron ng situation na maphaphase out ang incentives.”
However, he opened the possibility of companies enjoying incentives in a long-term basis, provided that their performance is on par and favorable to the country’s interests.
“Ngunit kung sila naman ay mageexpand at maglilikha ng mas maraming trabaho at opportunities para sa taong bayan then they can renew their incentives,” the chairman said.
“Kailangan kasi performance-based ang incentives. ‘Yon ang prinsipyo. Kung sino ang lumilikha ng trabaho, kung sino ang nakakacontribute then ‘yon ang may incentives,” he added.
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