Senatorial aspirants seek harder look at TRABAHO bill

MANILA, Philippines — Three senatorial aspirants have urged government to rethink the plan to rationalize fiscal incentives given to investors under the proposed second package of tax reform.

During the joint membership meeting of the Financial Executives Institute of the Philippines, Management Association of the Philippines, Makati Business Club and Philippine Chamber of Commerce and Industry, senatorial candidates Chel Diokno, Samira Gutoc and Florin Hilbay of opposition coalition Otso Diretso were asked about their position on the proposed second package under the government’s tax reform program or the Tax Reform for Attracting Better and Higher Quality Opportunities (TRABAHO) bill.

The bill, approved on third and final reading at the House of Representatives, would gradually bring down the corporate income tax rate to 20 percent from 30 percent, and rationalize fiscal incentives enjoyed by investors.

Among the changes under the bill is the removal of the five percent gross income earned paid in lieu of all taxes by firms registered with the Philippine Economic Zone Authority after they use up their income tax holidays.

Gutoc said there is a need for government to review the bill, particularly, the provisions on the rationalization of incentives.

“It should be reexamined. Businesses will have a hard time. We should be giving more incentives,” she said.

Incentives, she said, are important in making the country an attractive destination for investments.

For his part, Hilbay said it is important to undertake a study on the impact of the TRABAHO bill.

“I think we need to do the proper cost-benefit analysis. Of course we want to provide the incentive by lowering the tax rate but what is the cost?… How much business are we going to lose if we decide to lower the tax rate and do away with some of the incentives we’ve already given? So, I think, that’s a basic issue we need to resolve,” he said.

In conducting a cost-benefit analysis, he said inputs both from the government and from the private sector would be considered.

While it is time for government to rationalize incentives being given to investors, Diokno said there are some sectors which should continue to get tax exemptions as a form of support such as cooperatives and non-profit hospitals.

He also said he is in favor of lowering the CIT, but the government would have to put more focus on being efficient in collecting taxes when the measure is approved.

“The government goes through all the trouble of passing these tax laws but then the taxes aren’t collected which are supposed to be the lifeblood of the government,” he said.

Amid uncertainty on the TRABAHO bill, some investors have decided to put on hold decisions to expand operations in the country.