DOF official to lawmakers: Passing TRAIN 2 package necessary

An official of the Department of Finance on Wednesday allayed concerns of senators against the second package of the Duterte administration’s tax reform initiative.

Under the proposed second package of the Tax Reform for Acceleration and Inclusion (TRAIN), the government will lower the corporate income tax (CIT) from 30 percent to 25 percent and rationalize fiscal incentives.

“For TRAIN 2 we also need to convince the legislature that it is worth the time and effort. It is a measure that will reduce the corporate income tax for a vast majority of businesses in the Philippines, mostly small and medium enterprises,” Finance Assistant Secretary Tony Lambino said at a news conference in Malacañang.

“We really need to convince those who have doubts that this is worth doing and that it can be done within the time frame,” he added.

Lambino gave the reaction after Senate President Vicente Sotto III revealed that majority of senators are not inclined to support the second package of the TRAIN  despite an appeal from President Rodrigo Duterte during his third State of the Nation Address on Monday.

Sotto said this was because the promises and forecast made by economic managers when TRAIN 1 was being deliberated did not happen.

The first package of the tax reform law reduced personal income tax rates and at the same time increased excise taxes for petroluem products, automobiles, and imposed levy on sugar sweetened beverages.

Senators earlier scored the economic managers for failing to forecast a spike in inflation rate after it breached the 2 to 4 percent target range. Consumer prices hit a five-year high of 5.2 percent in June.

The senators have also the questioned delay in the implementation of measures to mitigate the effect of TRAIN 1 on the poor such as the unconditional cash transfer and fuel subsidy for drivers.

Senate Majority Leader Juan Miguel "Migz" Zubiri on Wednesday said no senator wants to sponsor the proposed TRAIN 2, but gave the assurance that the Senate will discuss the tax reform measure once the House of Representatives transmits it to the senators.

“We have to keep reminding everybody of the benefits that we are already receiving from TRAIN and the support it is providing to the most important investments in human capital and hard infrastructure,” Lambino said.

Duterte on Monday rejected suggestions to put on hold the TRAIN law in light of recent upticks in consumer prices.

“Some have incorrectly blamed our efforts towards a fairer tax system for all the price increases in the past months, and some irresponsibly suggesting to stop TRAIN implementation. We cannot, and should not,” he said in his third annual report to the nation.

The President emphasized that tax reform is needed in promoting inclusive growth, as additional tax revenue would help subsidize those in need.

He said the enactment of the second package “is what stands between today and millions of jobs in the near future.”

“This matter is urgent. Do not be part of the problem by ignoring it,” Duterte said.

Duterte also said all five packages of his tax reform program would have been forwarded to Congress by the end of this month. —KG, GMA News