MANILA, Philippines — A senator on Wednesday said industry representatives and chambers of commerce have started talking to lawmakers to warn them that the second package of the tax reform law could lead to problems and result in their transfer to other countries.
The Philippines under President Rodrigo Duterte has embarked on a reform of its tax system to help fund infrastructure and social services programs.
The first of these tax reform packages, which lowered income taxes and imposed additional levies on petrol and sugar-sweetened products, came into effect at the start of this year and has been blamed for the elevated inflation this year. Economic managers say the tax reform law is just one factor in rising prices.
The second package of the tax reform law aims to lower corporate tax from 30 to 25 percent and rationalize, or remove, the fiscal and tax incentives given to companies especially in economic zones.
Sen. Paolo Benigno Aquino IV, a member of the minority bloc at the Senate, said that some industries had started talking to senators and warning them about possible job losses.
"Every job in the country is important. You cannot just create new rules and then suddenly change them," Aquino said in Filipino.
The Liberal Party senator said that the Philippines might not be able to pass the government's second tax reform package this year and urged its economic managers to resolve the issues spawned by the first package first.
He said that the government must first ensure the full implementation of mitigating measures to help the poor cope with rising prices before pushing for the second pacakge of tax reform.
"It's difficult to move to TRAIN 2 if many are still suffering from TRAIN 1," Aquino said, referring to the law's official name, the Tax Reform for Acceleration and Inclusion Law.
Aquino pointed to the failure of many public transport drivers to receive government subsidie to help them deal with rising petrol prices.
He also noted that the government was yet to provide subsidies to all target poor households to shield them from TRAIN's inflationary effects.
Senators wary of new taxes
According Sen. Juan Edgardo Angara, the chairman of the Senate Ways and Means panel, the difficulty in passing TRAIN 2 lies in the path the government should take in reforming its corporate incentives regime.
He said that the Department of Finance would like to lower corporate tax and at the same time "reform" the incentives government agencies could give to companies.
"What the Finance department is to shorten the incentives given. Some are arguing to give them an adjustment period," he said.
Because of the inflationary effects of TRAIN 1, many senators are averse to sponsoring its second package especially with the upcoming midterm elections in 2019.
Senate President Vicente Sotto III said on Tuesday that he was willing to sponsor it for as long as it would not lead to new or higher taxes.
Senate Majority Leader Juan Miguel Zubiri said that Sens. Richard Gordon and Joel Villanueva already registered their possible opposition to the second package if it would remove incentives given to firms in Clark and Subic.
Aquino is one of the four senators who voted against the tax reform law and has proposed to amend the law to allow the postponement of petrol taxes should inflation in the past three months exceed official targets.