Trabaho bill delay will hurt business – tax expert

MANILA, Philippines – A tax expert warned that delaying the passage of the Tax Reform for Attracting Better and High-Quality Opportunities (Trabaho) bill would be an "injustice" to regular business taxpayers.

"Do not delay it, lower the corporate income tax to 20% because the prevailing rate is compromising the 99% of regular taxpayers," tax expert Mon Abrea told Rappler.

The Philippines currently has the highest corporate taxes at 30%, while regional peers only fall between 17% and 25%.

While the bill aims to lower corporate income tax, it also seeks to rationalize fiscal incentives or repeal over 100 special tax laws, which businesses fear might lead to job losses.

Schools, hospitals, and companies operating in economic zones have already signified their intent to block the proposal.

Abrea said the Department of Finance (DOF) should be open to passing the proposal without rationalizing incentives.

Finance Undersecretary Karl Chua previously said making incentives time-bound, transparent, and targeted is among the "non-negotiables" of the proposal.

When asked how the government will offset the foregone revenues, Abrea said the government should look beyond taxes.

"The government should focus on reforming agencies like the Bureau of Internal Revenue to widen the tax base and improve collections," Abrea said.

"Revenue losses? It's not the taxpayers' problem, it's the government's problem. Why burden us, responsible taxpayers, with possible job losses?" he added.

Abrea also insisted that the government must go after tax evaders, rather than taking away tax incentives to get funds.

Election factor

"Well, we have to try again next year, I guess."

This was the statement of Finance Secretary Carlos Dominguez III on the foreseen demise of the Trabaho bill under the 17th Congress. (EXPLAINER: Why the government is pushing for 2nd TRAIN package)

The DOF hoped to have the measure passed before the end of 2018, as legislators are deemed to be busy next year for the 2019 midterm elections.

"Billions of tax expenditure has been poured into redundant, ill-targeted, and opaquely administered incentives. We need an incentive system that is better designed, better targeted, and transparent," said AJ Montesa of the Action for Economic Reforms.

The Trabaho bill was already approved at the House of Representatives, but faces delays at the Senate, amid fears that the proposal might ironically lead to job losses.

The bill is pending before the Senate ways and means committee, chaired by reelectionist Senator Juan Edgardo Angara. –

Ralf Rivas

A sociologist by heart, a journalist by profession. Ralf is Rappler's business reporter, covering macroeconomy, government finance, companies, and agriculture.