SENATE President Vicente C. Sotto III signalled on Tuesday the Palace-endorsed version of the second wave of tax reforms under the Tax Reform for Acceleration and Inclusion bill (TRAIN 2) face rigid scrutiny in upcoming hearings despite its passage in the House of Representatives.
The HOR late Monday passed on third and final reading the administration’s latest major revenue-raising measure, which it had christened “Trabaho” bill, to stand for Tax Reform for Attracting Better and High-quality Opportunities.
Sotto told reporters on Tuesday the administration’s original version of TRAIN 2 faces an uphill struggle. “[That] original [version of] TRAIN 2, mahihirapan sa Senado ’yun [that’s going to see rough sailing in the Senate],” he said, indicating the Senate will come up with a “really rationalized tax bill” excluding the job-generating sector, which, Sotto says, has a better chance of getting adopted.
But then again, Sotto added, “we have to look at the House version and see if it is better than what I have filed.”
This developed as Sen. Juan Edgardo M. Angara, chairman of the Ways and Means Committee tasked to review tax bills, confirmed the Senate will not opt to first wait for the House-approved version of the revenue measure before calling Senate hearings to scrutinize the Palace tax proposal.
“We will most likely begin hearings [on the TRAIN 2 bill] next week,” Angara told the BusinessMirror, adding: “But we in the Senate will probably scrutinize the measure thoroughly—its effect on jobs, prices, given the state of the economy at present.”
In an ambush interview before convening Tuesday’s session, Sotto reported filing his version of the second TRAIN bill with “emphasis on the reduction of the corporate income tax, from 30 percent to 25 percent —that was the emphasis of my version.”
The Senate President, noting the rationalization issue on tax incentives, also opted to add a provision excluding economic zones “because they are self-generating, all of them being investment-driven.”
He explained that removing the existing tax incentives could trigger negative repercussions. “Pagka inalis natin ang tax incentives nung mga ’yun, medyo mapapasama na naman. Parang ’yung effect na narinig natin sa TRAIN 1 [If we remove those tax incentives, that might have a bad effect again. Like the effect we saw
with TRAIN 1]. So I am going to review the House version.”
House vote: 187-14
At least 187 House members voted in favor of the second tranche of the Duterte administration’s tax reform series, while 14 other representatives voted against the bill. Three congressmen, meanwhile, chose to abstain from the vote.
The approved 102-page bill contained changes based on 80 individual amendments made after the HOR’s second reading of the bill.
Senate passage not ruled out
While expressing reservations, Sotto, however, did not completely rule out the possibility that senators may eventually opt to adopt the House version of the TRAIN 2 bill. “That’s possible, if we like what we see. I will ask Senator Angara to look at it now to speed things up and to increase its chances of passing,” he said in a mix of English and Filipino.
The Senate President gave public assurances that if it is shown “to be beneficial, if it will not redound to additional problems on taxes, or might contribute again to inflation, we will definitely support it.”
Sotto signaled he may even withdraw plans to amend the administration’s original version of the second tax-reform bill. “Yes. After I review it, if we find it substantial…we will probably use the House version as a substitute bill or adopt the House version and archive my amending bill.”
“I will ask Senator Angara to review it first,” Sotto added, even as he allayed concerns raised by Senate President Pro Tempore Ralph G. Recto about the possible “inflationary effects” of the Palace tax bill. “Hindi naman agad mapapasa ‘yan [That won’t be passed recklessly].”