TRABAHO bill may displace thousands of workers

MANILA, Philippines — Over 110,000 workers in the wearables sector could lose their jobs should the government decide to implement the Tax Reform for Attracting Better and Higher Quality Opportunities (TRABAHO) bill, according to the Confederation of Wearable Exporters of the Philippines (CONWEP).

The estimated number of job displacements in the sector is based on a survey conducted by the CONWEP last year to look into the impact of the TRABAHO bill, which was filed in the previous Congress and approved on third reading at the House of Representatives. 

Through the TRABAHO bill, the government would gradually reduce the corporate income tax rate to 20 percent from the current 30 percent, and remove the five percent tax on gross income earned (GIE) paid in lieu of all national and local taxes by firms registered with the Philippine Economic Zone Authority. 

Based on CONWEP’s survey, around 36,000 workers in small-sized garment firms may be displaced when the TRABAHO bill is passed.

In addition, 57,600 garment workers in mid or large sized firms are at risk, while up to 17,000 workers engaged in the manufacture of leather goods could be affected. 

Currently, there are around 250,000 employed in the garments and leather goods sector.  

CONWEP executive director Ma. Teresita Jocson – Agoncillo said the survey results were given by the group to the Department of Trade and Industry (DTI)  and Department of Finance. 

She said the DTI responded to the group by saying the agency would look into having a higher GIE rate. 

Asked if the group is amenable to a higher GIE rate, she said: “seven (percent) would already be a stretch for us.”

“We need dialogue on that,” she said. 

CONWEP, along with other industry groups like the Philippine Ecozones Association, Semiconductor and Electronics Industries in the Philippines Foundation Inc.,  and Information Technology and Business Process Association of the Philippines, have earlier urged lawmakers to consider alternative measures over the proposed tax incentive cuts under the TRABAHO bill to sustain the country’s economic growth momentum as the proposed measure is likely to be refiled during the 18th Congress. 

To address concerns being raised, Trade Secretary Ramon Lopez has said the agency wants to propose a higher GIE rate of eight percent for existing PEZA locators, or to allow the higher GIE rate over a longer transition period of 10 years instead of the shorter transition period of two to five years for the five percent GIE incentive provided under the TRABAHO bill. 

He said the DTI estimates an additional P30 billion to P40 billion worth of revenues would be generated from the payment of a higher GIE rate of eight percent.