Gloria Arroyo believes TRABAHO bill will 'bring next level of development'

MANILA, Philippines – The Duterte administration's controversial second tax reform bill has found an ally in House Speaker Gloria Macapagal-Arroyo.

"I am biased in favor of tax reform and I believe the tax reform of President Duterte will bring us to the next level of development," Arroyo said in an interview with CNN Philippines that aired on Wednesday evening.

The Tax Reform for Attracting Better and High-Quality Opportunities (TRABAHO) has passed the House committee on ways and means and now on its way to the plenary discussions.

But at the Senate, legislators, some of which are running for re-election next year, have opted not to tackle the bill, which businesses fear would result into job losses once enacted.

The bill will cut corporate income tax rates to 20 percent from the current 30 percent, but would also reduce tax perks granted to firms operating in economic zones, including the booming business process outsourcing industry.

Criticisms are being hurled against TRABAHO after the Duterte government's first tax reform law, the Tax Reform for Acceleration and Inclusion (TRAIN) law, was blamed for fast inflation, which hit a nine-year high of 5.7 percent in July.

But for Arroyo, who was also criticized for increasing the value-added tax to 12 from 10 percent in 2005, the government needs revenues from tax reform to provide public services such as free college tuition and an increase in police and military salaries.

"We couldn't have done that without TRAIN," Arroyo said.

"Fiscal reforms (during my time) were the ones that... provided the platform to reduce the poverty rate," Arroyo said. "A lot will also say that it is the basic reason why we got investment grade (credit rating) in 2014."

Arroyo, an economist, said she considers fiscal reform as her "important and lasting legacy," indicating the House leadership will continue to support TRABAHO.

Duterte wants TRABAHO enacted into law before the end of 2018.