Senate to begin hearings on second tax reform

THE SENATE on Tuesday will hold its first public hearing on the second tax reform package, with senators expected to scrutinize the rationalization of fiscal incentives provisions and its possible effects on jobs and prices.

Senator Juan Edgardo M. Angara, chairman of the Senate Ways and Means committee, said the panel will try to strike a balance between streamlining fiscal incentives, which the Finance department has blamed for billions of pesos in foregone revenues yearly, and keeping the Philippines’ investment lure and jobs intact.

“That would be an ideal outcome. I can tell you if it’s doable after a few hearings, perhaps when we hear out all the stakeholders,” Mr. Angara said in a mobile phone message to BusinessWorld.

“The important thing is we listen to the different sectors because many say that jobs may be

lost if we remove the incentives on foreign direct investments and exporters, so we will really have to study that,” he said in a radio interview, speaking in Filipino.

“At a time when the country’s economic growth has slightly slowed down, we should be careful on what we will do because we might send a wrong signal to the investment community.”

The committee will tackle Senate Bill No. 1906, or the proposed Corporate Income Tax and Incentives Reform Act authored by Senate President Vicente C. Sotto III, as well as separate bills cutting the corporate income tax (CIT) rate and rationalizing fiscal incentives, proposed amendments to the Tax Incentives Management and Transparency Act and other tax administration reforms.

The House of Representatives approved its version — House Bill No. 8083 or the Tax Reform for Attracting Better and High-Quality Opportunities (TRABAHO) — on third and final reading on Sept. 10.

Senate Bill No. 1906 cuts the CIT rate to 25% from 30% in the first year of the implementation. That compares to HB 8083 which gradually reduces CIT rate to 20% by two percentage points every other year starting 2021.

It also seeks to repeal special laws on fiscal incentives and consolidate all such perks in a single measure.