Chua: “Look at the tax reform as a package”

"Look at the tax reform as a package."

This was how finance undersecretary Karl Kendrick Chua told critics of the government’s comprehensive tax reform program (CTRP).

As the reform's second package hurdles approval as several sectors criticize it could hurt investment growth, Chua stressed the whole tax reform "is an investment for the future".

In a recent interview in Cebu City, the finance official asked the business sector to support the second package of the government’s CTRP which seeks to cut corporate taxes and at the same time rationalize fiscal incentives.

"Lower corporate taxes but a broader corporate income tax base where everyone contributes -- a fair share of what they represent in this country," he pointed out.

Explaining in jest, Chua urged critics to look at the tax reform as a marriage.

"When I married my wife, I married her as a package. Not only her eyes, not only her nose. That's why I invite all of you to look at our reform as a package because that's where you'll see the benefits of tax reform," Chua explained further.

In January this year, the government started implementing the first package of the CTRP which has cut personal income taxes and raised levies on fuel, sugary drinks and cigarettes.

The Congress has approved its version of Package 2 known as the Tax Reform for Attracting Better and HighQuality Opportunities Act (TRABAHO) last September.

The Senate is still discussing in its ways and means committee its version filed by Senate President Vicente Sotto III and called the Corporate Income Tax and Incentives Reform Act.

“Some industry players claim that the TRABAHO bill will result in hundreds of thousands of job losses. These statements are meant to sway public opinion against the reform, but do not have sound basis,” finance secretary Carlos Dominguez III earlier said in a statement.

“The reality is that the current incentives regime protects the interests of a select few highly profitable and large enterprises to preserve the special treatment they have been enjoying for decades without limits. The current system of granting incentives breeds unfairness and lack of accountability,” he added.

Dominguez said the new “targeted, timebound, performance-based and transparent” set of incentives under Package 2 will include perks such as more tax deductions for firms hiring more workers, and longer tax holidays for those that would set up shop in areas outside the capital, especially in post-conflict and post-calamity areas.

Moreover, Package 2 will allow additional tax deductions in incremental spending on labor, research and development (R&D), reinvestment, and domestic input expense, among other factors.