TRABAHO bill seen to create 1.4 million jobs in 10 years

MANILA, Philippines — The proposed reduction in corporate income tax (CIT) under the second package of the Comprehensive Tax Reform Program (CTRP) is projected to generate as much as 1.4 million jobs from 2021 to 2029, according to the Department of Finance.

In a statement, Finance Assistant Secretary Antonio Lambino said the proposed lowering of CIT under the Tax Reform for Attracting Better and High-Quality Opportunities (TRABAHO) bill is expected to free up more capital for firms, enabling them to increase their investments and hire more people.

Citing DOF estimates, Lambino said the jobs generated by the bill could reach 113,944 in the first year of its implementation in 2021; 171,940 in 2023; 252,031 in 2025; 361,767 in 2027; and 511,021 in 2019; for a total of 1.4 million jobs over the 10-year period.

Lambino said this is in line with the earlier statement of Finance Undersecretary Karl Kendrick Chua, in which he emphasized the impact of the lower CIT rate on job generation.

“With lower tax rates, such a proposal is hardly inflationary while creating over a million jobs over the medium term as firms expand with more money at their disposal,” Chua said.

In addition, Lambino said the proposed tax incentives reform under the bill is also expected to result in net employment gain, as it prioritizes firms that create more jobs in the grant of tax perks.

“This pro-investment tax reform package is seen to be even more attractive to firms because it will give them additional incentives on labor, domestic input and training under the proposed menu of tax incentives, while activities that already provide positive benefits to society, such as those that develop the countryside, create jobs and contribute to exports can continue to enjoy tax incentives,” he said.

Under the House-approved TRABAHO bill, the government seeks to reduce the current CIT rate of 30 percent by two percentage points every two years starting 2021 until it reaches 20 percent in 2029, while rationalizing fiscal incentives.

The Senate is still discussing at the committee level its own version of the tax measure, dubbed as the Corporate Income Tax and Incentives Reform Act.

Finance Secretary Carlos Dominguez earlier expressed hope that the Congress could pass CTRP’s Package 2 soon, in consideration of President Duterte’s appeal to approve the measure within the year.

“This second package of the CTRP will level the playing field for business and spur greater economic activity that will spell more jobs in the long haul,” Dominguez said.

“The CIT cut will make the business sector more competitive in the region and give a significant boost to SMEs that employ a majority of Filipino workers,” he said.