LEDAC to meet again ASAP as Senate turns cool on TRAIN 2

MANILA, Philippines — The Legislative-Executive Development Advisory Council, or LEDAC, will convene again soon to agree on legislative priorities of President Rodrigo Duterte, including his administration’s proposed corporate tax reform that senators are unwilling to sponsor.

Corporate tax reform, filed as House Bill 745, comprises Package 2 of the Duterte administration’s Comprehensive Tax Reform Program. The proposal is also known as TRAIN 2, after the name of the Tax Reform for Acceleration and Inclusion law.

The bill provides for a one-percentage-point reduction in the current 30 percent corporate income tax every year starting 2019, provided that the cut would not reach lower than 20 percent. The measure also seeks to streamline fiscal incentives to grant them only to those who need them.

But despite Duterte’s public popularity and the super-majority he holds in Congress, Senate majority leader Juan Miguel Zubiri said the second package of the tax reform program has “very little support” from senators.

At a breakfast forum, Budget Secretary Benjamin Diokno said the LEDAC might meet again to “thresh out the differences between the House, the Senate and the Executive.” The 20-member advisory body was established under Republic Act 7640 during the administration of former President Fidel Ramos.

But Diokno admitted that Package 2 is unlikely to breeze through Congress, noting that “2019 is an election year... tax is usually unpopular.”

“Well, they (senators) are part of the administration. It is their responsibility to respond to the demands of the president. The president is very clear: he wants all the tax reform packages passed before the end of the year,” Diokno said.

“We plan to convene the LEDAC as soon as possible... we don’t have a date yet,” he added.

The Department of Finance is targeting to introduce in July this year the rest of the tax reform packages that mainly cover property and capital income taxation. 

Since the start of 2018, the DOF has submitted Package 2, as well as the reforms on alcohol excise and mining, while supporting the bill of Sen. Manny Pacquiao on tobacco excise.

“I urge Congress to take them (tax reform packages) seriously and pass them in succession, for there is no chance that we can deliver our promises without an equitable tax system,” Duterte asked lawmakers during his third State of the Nation Address.