ALTHOUGH the Department of Finance (DOF) insisted that more jobs will be created in the long run under the Tax Reform for Attracting Better and High Quality Opportunities (or what the House now calls “Trabaho”) law, it is amenable to including in the law a fund that will serve as a “safety net” in case of job losses.
Finance Chief Economist and Undersecretary Karl Kendrick T. Chua told reporters in a Palace briefing on Wednesday that the inclusion of the fund under the measure—referred to as the second package of the Tax Reform for Acceleration and Inclusion (TRAIN) does not mean that there will really be job losses.
Nonetheless, he posed no objection to a safety net fund, but clarified in a chance interview that it was really Congress, not the finance department, that proposed it.
“Actually we never proposed it. It’s Congress who proposed the fund just in case because I cannot guarantee 100 percent; but based on the reform we presented, it [job loss] doesn’t seem to be the case. At least we have something to offer, like a contingent fund, if ever there will be displaced [workers], if ever there will be because, if there is, you don’t [have to] wait for the next budget,” he said.
Sought for clarification if there will really be job losses, Chua said: “Everything is possible, but it is improbable.”
This was after Act Teachers Party-list Rep. Antonio L. Tinio pointed out in a television interview on Tuesday that there is a provision in the bill for an annual P500-million structural adjustment fund for five years for workers who will be displaced by the rationalization of fiscal incentives.
Tinio said this amount can be likened to a conditional cash transfer for workers.
“Even the proponents foresee that there will be displacements over at least in the next five years if this bill is implemented,” Tinio said.
Aside from this, the lawmaker noted provisions for a P500-million fund for retraining and P5 billion for upgrading the skills of business-process outsourcing (BPO) workers.
Without giving figures, Chua stressed that instead of job losses, this bill will “massively” create many jobs for the economy as a whole, adding that there are only 3,000 firms receiving incentives right now. In contrast, there are 900,000 micro, small and medium enterprises with much more jobs that they can create or expand. These MSMEs will benefit from the bill, which will not just rationalize the tax perks.
Finance Assistant Secretary Joselito G. Lambino II also noted that the bill will reduce the corporate income-tax rate and with this, the MSMEs will have more money to improve their productivity and later on expand to hire more workers. He noted that 60 percent of Filipino workers are hired by MSMes.
“That’s why our forecast on the balance is that the Trabaho bill will be jobs-positive, which is why Congress called it Trabaho [bill] in the first place,” Lambino said.
The Trabaho bill seeks to lower corporate income-tax rate from 30 percent to 20 percent by 2029 and rationalize fiscal incentives.
From the current 30 percent, the bill cuts the rate of corporate- income tax to 28 percent beginning January 1, 2021; 26 percent beginning January 1, 2023; 24 percent beginning January 1, 2025; 22 percent beginning January 1, 2027; and 20 percent beginning January 1, 2029.
As for the fiscal incentives, the DOF said they want incentives to be performance-based, targeted, time-bound and targeted; and provide new fiscal incentives for deserving recipients.
Image credits: Toto Lozano / Presidential Photo