Speaker Arroyo delivers, passes TRABAHO at House

Speaker Arroyo delivers, passes TRABAHO at House
President Rodrigo Duterte talks to House Speaker Gloria Macapagal-Arroyo and Finance Secretary Carlos Dominguez III during the Government Owned and Controlled Corporation Day at the Rizal Hall in Malacañan Palace on Aug. 15, 2018.
The STAR / KJ Rosales

MANILA, Philippines — House Speaker Gloria Macapagal-Arroyo delivered her first victory for the Duterte administration as the chamber's leader after she and her colleagues approved the government's second tax reform bill on Monday.

The Tax Reform for Attracting Better and High Quality Opportunities or TRABAHO bill was okayed on third and final reading by the Lower House with a vote of 174 to 14, with 3 abstentions.

The measure practically breezed through the House, moving from committee-level approval to securing its final stamp within just 33 days. Arroyo has vowed to support TRABAHO, which is among the priority bills of President Rodrigo Duterte.

TRABAHO will now go to the Senate, where it is unlikely to get passed within the year as some senators seeking re-election next year try to avoid drawing the ire of voters who fear the bill will result in job losses.

Under TRABAHO, companies operating in the Philippines will pay a lower income tax of 20 percent by 2029 from currently 30 percent. The bill provides a staggered reduction of 2 percent each year beginning 2021.

While corporate income tax rates will go down, firms operating in economic zones will have to deal with less tax incentives. Specifically, TRABAHO aims to cut make tax perks like income tax holidays time-bound, performance-based and targeted on specific industries. Critics say this could drive away existing and future ecozone investors and result into job losses.

It does not help that TRABAHO's predecessor, the Tax Reform for Acceleration and Inclusion, is heavily being blamed for the accelerating rise in consumer prices this year.

Critics say the increase in oil excise levies under TRAIN pushed inflation to an over nine-year high of 6.4 percent in August. On Tuesday, Finance Assistant Secretary Tony Lambino rejected this claim again, saying even without TRAIN, prices would have gone up markedly.

Various industry groups, including the American Chamber of Commerce and Industry, have opposed TRABAHO. The Philippine Economic Zone Authority, one of the biggest economic zones where tax perks are offered to investors, also said the bill pushed by the Department of Finance could deter foreign investors. 

Government data show PEZA registered investments dropped 54 percent year-on-year to P60.99 billion in seven months to July. Their counterpart with the Board of Investments also decreased 15 percent to P252.32 billion.

Duterte wants TRABAHO to be enacted into law within the year.

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