TRAIN 2’s name modified to 'TRABAHO' after backlash

MANILA, Philippines — The House of Representatives committee on ways and means approved yesterday the second package of the administration’s controversial Tax Reform for Acceleration and Inclusion program, which the Department of Finance (DOF) has labeled as TRAIN 2.

Due to public backlash against TRAIN 1, the committee changed the name for TRAIN 2 to Tax Reform for Attracting Better and High Quality Opportunities or TRABAHO.

The second package proposed to cut corporate income tax from 30 percent to 25 percent and take away fiscal incentives, including tax exemption, from hundreds of businesses in export processing zones.

TRAIN 1 imposed new and higher taxes on fuel, sugar-sweetened beverages and tobacco products. It also reduced income tax for millions of individual taxpayers.

Critics have blamed rising inflation largely on the higher taxes the government levied starting in January under the TRAIN law.

The Philippine Statistics Authority reported yesterday that inflation, which represents the increase in the prices of goods and services, further jumped to 5.7 percent from 5.2 in June. 

Senate ways and means committee chairman Sonny Angara has said 0.9 percent or less than one percent was the highest inflation rate the DOF told lawmakers when it was badgering them to approve the TRAIN law.

The business sector is jittery about the second installment of tax reform. Business leaders have warned the administration and lawmakers that if fiscal incentives were taken away, many businesses would close shop or relocate to other countries.

Speaker Gloria Macapagal-Arroyo has said the passage of TRAIN 2  is a priority of the House under her leadership.

“It’s not called TRAIN 2 because TRAIN 2 is misleading. This is going to be a corporate incentives reform. Remember in the SONA (State of the Nation Address) of President Duterte, it’s there,” she said.

Another House leader, deputy speaker and Batangas Rep. Raneo Abu, said TRAIN 2 “is not a tax bill.”

“It is a corrective measure to address redundant incentives given to firms, which fixed income earners are in a way subsidizing. We should support infant industries but it should be time bound. We are lowering the corporate income tax. That will cushion the effect of removing the incentives of those companies which for so long enjoy the incentives but had no inputs to exports and labor,” Abu said. 

He said 57 percent of all businesses enjoying fiscal incentives do not deserve to continue enjoying such privileges.