PRESIDENTIAL spokesperson Harry Roque on Monday, July 30, told lawmakers that the second version of Tax Reform for Acceleration and Inclusion (TRAIN) will not impose new taxes.
“TRAIN 2 is different so there is no need to be afraid,” Roque said.
Roque said that senators running this upcoming election might not want to be linked in another tax law so as not to earn the public’s ire. He also explained that the reform law will only affect corporate taxes.
“This tax bill is different because it does not impose new taxes. It will lower the corporate tax so we won’t have the highest corporate tax in Asia,” he added.
Roque also emphasized the importance of informing the public about the primary objectives of the tax law.
“It’s correcting their misconception that we are levying new taxes. We are not, we are making it easier for corporations to operate.” Roque stated.
TRAIN 2 provides a 5 percent decrease in corporate taxes from the current 30 percent down to 25 percent.
“We are reducing the tax burden on corporate tax filers,” Roque added.
In a report from the Philippine Star, the Department of Finance said that TRAIN 2 will help more than 95 percent of the corporations in the country. Such corporations are said to be paying the highest corporate income tax in the region.
TRAIN 2 aims to include new incentives for current businesses to further expand and later on adopt a new form of technology. It also strives to rationalize the incentives given to investors.
Roque said that the Presidential Legislative Liaison Office must work with the lawmakers in discussing the reform law so any traces of hesitancy will be eliminated.
According to the report, finance officials said TRAIN 2 would simplify an overly complex corporate tax system. Its complexity imposes a large administrative burden for the government and taxpayers and gives “special treatment” to a minority of corporations that pay 6 percent to 13 percent.
Senate majority leader Miguel Zubiri admitted that no senator wants to sponsor the measure since they were “traumatized” by the first version of TRAIN.
The first version of TRAIN exempts individuals earning an annual taxable income of P250,000 and below from paying personal income tax. It also increased the tax exemption for 13th-month pay and other bonuses to P90,000.
However, TRAIN 1 also imposed new taxes on diesel, liquefied petroleum gas, bunker fuel for electricity generation and higher taxes on oil products. It is also criticized for the increase in commodity prices but officials dismissed those claims saying it was purely a result of a weak peso and a global oil price hike.