House committee studies Package 2 of TRAIN Law
July 31, 2018 at 16:00
House committee studies Package 2 of TRAIN Law
House of Representatives | 24-July-2018, 09:21:32 PM
The House committee on ways and means on Tuesday immediately buckled down to work a day after the Third Regular Session of the 17th Congress formally began.
Led by committee chair Dakila Carlo Cua, the panel convened for the briefing by the Department of Finance (DOF) on the cost-benefit analysis of Package 2 of the Tax Reform for Acceleration and Inclusion (TRAIN) Law as well as on House measures advocating for lower corporate income tax rate.
Finance Undersecretary Karl Kendrick Chua expressed the DOF’s support for the measures, noting that the Philippines has one of the highest corporate income tax rates in the region at 30 percent. The government, however, only managed to collect only 3.7 percent of gross domestic product in corporate income tax revenue.
“That is a revenue productivity of 12.3 percent. Compare that with Vietnam, Malaysia, or Thailand with much lower rates of 20 percent or 24 percent, but they collect 4 percent, 6 percent, or 7 percent of GDP, respectively, with much, much higher productivity,” Chua said.
“On the other hand, we have a very complicated tax incentive system. We grant the most generous fiscal incentives since they are in lieu of all taxes, both national and local, and given forever,” he further said.
As a result, Chua explained the current income tax system suffers a huge inequity.
In Package 2, he said the government’s main objective is to arrive at more fair and accountable tax incentives. “Because every peso granted as tax incentive is a peso off the budget that could have been spent for infrastructure, health, education, and social protection that would benefit everyone and not only a few,” he said.
He outlined guideposts for the next part of TRAIN, saying it should be performance-based, time-bound, targeted, and transparent.
Rachel Echague of the Board of Investments (BOI) presented a BOI study of Package 2 and its analysis of tax incentives, investments, and the jobs and revenue generated in relation to these.
Meanwhile, Elmer San Pascual of the Philippine Economic Zone Authority (PEZA) voiced the agency’s support for Package 2 and efforts to lower the corporate income tax rate.
Pascual, however, said there are constitutional concerns that must be addressed.
Committee vice chair Lianda Bolilia asked the different agencies to harmonize their methodologies and figures so the House committee can make well-informed decisions.
The continued analysis of Package 2 comes on the heels of President Rodrigo Duterte’s third State of the Nation Address where he affirmed that the national government will continue to implement the TRAIN Law.
Aside from Cua and Bolilia, others present during the hearings were Reps. Isagani Amatong, Joey Sarte Salceda, Jocelyn Limkaichong, and Orestes Salon. / CMB Engracia
Source: https://www.congress.gov.ph/press/details.php?pressid=10771
