Roque: TRAIN 2 will reduce corporate taxes

Malacañang is optimistic it can change the minds of senators on the second package of the Tax Reform for Acceleration and Inclusion (TRAIN 2) law after a Senate leader said no one in the chamber is willing to sponsor the measure.

Presidential spokesman Harry Roque blamed the “misconception” that TRAIN 2 will increase taxes for the senators’ hesitation to sponsor it.

“On the contrary, TRAIN 2 will reduce corporate taxes. So, it’s not true that TRAIN 2 will impose new taxes,” Roque said at a press briefing yesterday in Zamboanga Sibugay. “I think it’s a matter of telling the senators what TRAIN 2 is and I think we can overcome their initial hesitancy.”

He added that the Palace expects the Presidential Legislative Liaison Office to work with senators to discuss the matter.

TRAIN 2 aims to reduce corporate income tax to 25 percent from 30 percent. The finance department said the measure would benefit more than 95 percent of businesses in the country that are paying the highest corporate income tax rate in the region.

It also includes provisions for a sunset period and new incentives for current players that expand their businesses or adopt new technology.

Finance officials said TRAIN 2 would simplify an overly complex corporate tax system that imposes a large administrative burden for the government and taxpayers and gives “special treatment” to a minority of corporations that pay 6 percent to 13 percent.

Senate Majority Leader Juan Miguel Zubiri, however, admitted that none of the senators are ready to sponsor the measure because lawmakers were still “traumatized” by the impact of the first TRAIN package.

Zubiri said some senators want to examine the job losses to be caused by the provision removing the fiscal incentives enjoyed by several industries.

The first TRAIN package exempts those earning an annual taxable income of P250,000 and below from paying personal income tax and raised the tax exemption for 13th month pay and other bonuses to P90,000.

But it also slapped new taxes on diesel, liquefied petroleum gas, kerosene and bunker fuel for electricity generation and higher taxes on other oil products. The law has been blamed for the higher prices of commodities but officials insist the price hikes were mainly caused by changes in global oil prices and a weak peso.