DoF: TRAIN 2 will cut unnecessary giveaways
The Department of Finance (DoF) has assured the business sector that Tax Reform Acceleration and Inclusion (Train-2) will not dampen high contributing sectors nor weaken the interest of investors.
This was the reminder made by DOF director of the Strategy, Economics and Results Group (SERG) Arnelyn A. Abdon in a press conference yesterday amid calls from the private sector to retain the incentive packages currently enjoyed by over 3,000 corporations.
Abdon said that while TRAIN2 will gradually reduce corporate income tax rates from 30 percent to 25 percent, the second batch of tax reform will identify companies that deserve to be given incentives.
In 2015, the Philippine government gave out a total of P300 billion in the form of fiscal incentives given to 3,000 firms.
Incentives that were only intended to lure investors will definitely be abolished, but the government will just rationalize or streamline unnecessary "giveaways" especially to companies that are already big and earning well.
"Just like a scholarship, it has a timeline. Incentives too are time-bound," Abdon explained in a press conference yesterday held at Rica's Cafe at the Henry's Hotel in Banilad.
Abdon was in Cebu yesterday as part of DOF's information campaign to educate the public further calculated long term positive effects of the comprehensive tax reform under the Duterte administration.
She further reiterated that fuel price increase or instance cannot be blamed solely on the implementation of the first TRAIN law in January, but the spike is mainly due to external factors such as global rates, foreign exchange, among others.
According to Asian Development Bank (ADB), the implementation of TRAIN is expected to augment tax revenues and provide additional fiscal space for more progressive public spending.
The policy reforms are expected to yield additional P90 billion to P144 billion in tax revenue collection in 2018 and 2019, respectively.
With economic growth gaining momentum, inflation is projected to reach four percent this year as global oil and food prices rise, and higher excise taxes on some commodities take effect.
Next year, inflation is expected to marginally decline to 3.9 percent, ADB projected.
What needs to be understood by many, Abdon stressed that the comprehensive tax reform program is mainly to accelerate the development of the Philippines by improving infrastructure and basic services.
TRAIN 2 is now under deliberation at the House of Representatives, the interagency adhoc committee is being formed to craft the Strategic Investment Priority Plan (SIPP) to identify the industries and sectors that are deserving to enjoy incentives.
The SIPP will be jointly crafted by the Board of Investments (BOI), Department of Trade and Industry (DTI), National Economic and Development Authority (NEDA) and DOF.
Recently, the Philippine Software Industry Association (PSIA) said that the implementation of TRAIN 2 law would dampen the future of Information Technology/Business Process Management (IT/BPM) sector in the Philippines.
PSIA president Jonathan de Luzuriaga, said the outsourcing industry now as a whole is "stepping their brakes" in their business continuity plans while TRAIN-2 is still under discussions.