The second part of the administration’s tax reform measure, dubbed as the Tax Reform for Attracting Better and High Quality Opportunities or TRABAHO, is another priority agenda of the House of Representatives under the leadership of Speaker Gloria Macapagal-Arroyo.
House Bill 8083 was passed on third reading last Sept. 10 and renamed to TRABAHO from the Tax Reform for Acceleration and Inclusion (TRAIN) under Republic Act 10963.
“It’s not called TRAIN-2 because TRAIN-2 is misleading. This is going to be a corporate incentives reform [measure]. Remember in the SONA [State of the Nation Address] of President Duterte, it’s there,” Arroyo explained.
TRABAHO proposes to cut the corporate income tax from 30 percent to 25 percent and take away fiscal incentives, including tax exemption, from hundreds of businesses in export processing zones.
TRAIN, which took effect last January, imposed new and higher taxes on fuel, sugar-sweetened beverages and tobacco products and reduced income taxes for millions of individual taxpayers.
Deputy Speaker Raneo Abu has defended the measure, saying this “is not a tax bill.”
“It is a corrective measure to address redundant incentives given to firms which fixed income earners are in a way subsidizing. We should support infant industries but it should be time bound. We are lowering the corporate income tax. That will cushion the effect of removing the incentives of those companies which for so long enjoy the incentives but no inputs to exports and labor,” Abu said.
He said 57 percent of all businesses enjoying fiscal incentives do not deserve them.
The Arroyo-led House has been burning the candle at both ends to pass to ensure the passage of the President’s priority legislation. The Speaker made this clear after attending a hearing of the House Committee on Ways and Means on the measure.
“I said in my very short statement upon assumption, the first and foremost job I have as Speaker is to carry out the legislative agenda of President Duterte,” she said.
Following the Ways and Means Committee hearing, Arroyo had a working lunch with government economic managers and some lawmakers to discuss economic issues such as inflation.
The second tax reform package aims to lower the corporate income tax paid by some 95 percent of businesses while retaining and providing new fiscal incentives for deserving recipients that will contribute to national development and help generate pro-poor investments and jobs, Arroyo said.
More than 99 percent of businesses are micro, small, or medium enterprises employing around 65 percent of the country’s workers.
Duterte, in his third SONA, said the enactment of TRAIN 2 or TRABAHO is what stands between today and millions of jobs in the near future.
“I hope to sign Package 2 before the year ends. I urge Congress to pass it in a form that satisfies our goals and serves the interests of the many, not just the wealthy few,” he said.
The Arroyo-led House had already passed on third and final reading all the remaining Comprehensive Tax Reform Progam (CTRP) as requested by the President. These include the taxes on alcohol and tobacco, capital income tax, property valuation, and tax amnesty. Except for the Tax Amnesty Bill which has already been ratified by both Senate and the House, the Lower House is awaiting the passage of these bills in the Senate.