THE Department of Finance (DOF) is optimistic that the second package of the Comprehensive Tax Reform Program will be passed under the 17th Congress, even though a number of other major bills will have to be passed at the Senate level.
Finance Undersecretary Karl Kendrick T. Chua said the department continues to hold dialogues with various stakeholders to point out the benefits of the bill, dubbed in the House of Representatives as the Tax Reform for Attracting Better and High-Quality Opportunities (Trabaho).
“We remain optimistic. The key is continuous dialogue and communication, so that people can see the benefits. So I remain optimistic that this is something worth pursuing, and when they see the benefit, it is something they can consider sooner,” Chua said at a briefing to update journalists on developments in the tax-reform program.
Asked if the bill can be passed into law this year, he acknowledged that time had been cramped because the election campaign season is about to start, and the Senate is focusing on other important bills, including the 2019 national budget, making passage by Christmas bleak.
Earlier, the BusinessMirror polled senators on the chances of the bill’s passage before the Christmas break, and most of those interviewed doubted that happening.
Still, Chua held out hope it could hurdle Congress early next year. “We are short on time because we only have eight weeks before the campaign season starts, so we are working double time…. This year I think it’s very difficult, but I think within this Congress the chances are still good,” he added.
Among the bills that the Senate is currently focusing on are the rice tariffication bill, as well as the tax amnesty measure, among others.
Fears disputed
Chua explained that Trabaho will help generate jobs and investments in the country, clarifying notions that businesses won’t invest in the Philippines due to the lack of incentives.
He explained that investors are on a wait-and-see stance, since they still don’t know if the bill will be passed or not, and not because of the lack of incentives.
“A lot of investors are waiting for this bill to pass, and that is for them the No. 1 uncertainty. It’s not precisely the contents of the bill, it’s just that if its not yet passed, they don’t know the final incentive package, and they cannot invest. So that makes them prolong their wait-and-see,” he said.
Last month the DOF reported that it expects the creation of around 1.4 million jobs between 2021 and 2029, when the corporate-income tax (CIT) will have been cut to 20 percent under the Trabaho bill.
Based on DOF estimates, the proposed lowering of the CIT by 2 percentage points every two years starting 2021 until 2029 will create over a million jobs by freeing up more capital for firms to invest and hire more workers.
Jobs, jobs, jobs
Finance Assistant Secretary Antonio Joselito G. Lambino II said that once approved by Congress, the law will create an estimated 113,944 jobs in 2021 all the way up to 1.4 million in 2029.
For instance, at a 26-percent CIT rate in 2023, an additional 171,940 jobs will be created: with the numbers increasing to 252,031 in 2025; another 361,767 in 2027; and 511,021 more in 2029, or a total of 1.4 million jobs over the 10-year period, according to the DOF.
Under the proposed bill, firms outside Metro Manila and adjacent urban areas are entitled to an additional two years of incentives on top of the regular five-year maximum to promote inclusive growth and rural development.