Lost revenue? Lawmaker sees upside in lower corporate taxes under Train 2
A member of the House Committee on Ways and Means, which approved the substitute bill for the Tax Reform for Acceleration and Inclusion (Train) package two, said the losses the government will incur due to lower corporate income taxes (CIT) is not yet definite.
“For every percentage reduction daw they will have a P26-billion reduction in tax collection from corporate income (tax). But again, that is myopic,” Marikina Rep. Miro Quimbo said in an exclusive interview after the House hearing on Tuesday.
Under the substitute bill or the Tax Reform for Attracting Better and High-quality Opportunities (TRABAHO), the CIT which currently stands at 30 percent will go down by two percentage points each year, starting in 2021, and ending at 20 percent in 2029.
However, an official from the Department of Finance (DOF) revealed during the hearing that the measure will cost the government at least P60 billion worth of tax revenues per decrease, or P26 billion per percentage reduction without inflation.
Quimbo said the DOF’s original plan was to allow a decrease in CIT, but certain incentives that companies currently enjoy will be scrapped — a measure which he claims is unfair for companies.
“The initiative takes two forms, itong TRAIN 2: one is the lowering of the corporate income tax […] the other aspect is the removal of tax incentives,” Quimbo said.
“What the DOF wants us to accept is that we take both together, meaning hindi tayo pwedeng magbaba ng (we cannot lower) corporate income tax unless we take away incentives that are being given. But that just can’t be, that’s not right, because those are two different problems with two different solutions,” he explained
The lawmaker said the loss is a small sacrifice in exchange for the opportunities that will open up as businessmen would be encouraged to invest in the country.
“‘Yong usapin ng reduction ng CIT is trying to address two things, one is addressing the uncompetitiveness of the country because our tax rates are too high, we don’t attract investments,” Quimbo said.
“And then secondly, it is way too high, it’s unjust. At 30 percent, masyado siyang mataas na (it’s too high that) you’re actually taking away three months of income of our businessmen,” he added.
He also believes that companies who defer from paying correct taxes would be obliged to pay, due to lower expenses.
“The purpose of the reduction of CIT is not only to give justice to those who are already paying, but more importantly, to encourage those who are not paying, magbayad na kayo, binabaan na namin eh (Pay your taxes, we already lowered the rate),” Quimbo added. /ee
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