Lawmakers urge scrapping of fuel taxes under TRAIN

Opposition and administration lawmakers crossed party lines yesterday in pressing President Duterte to scrap fuel taxes imposed under the controversial Tax Reform for Acceleration and Inclusion (TRAIN) law.

They made the call on the heels of the report of the Philippine Statistics Authority that inflation – or the increase in the cost of goods and services – remained at 6.7 percent in October, the same level as in September.

Bayan Muna Rep. Carlos Zarate said prices would remain high unless fuel taxes imposed under TRAIN were scrapped.

He said inflation started to steadily go up since January this year, when such levies were imposed.

Zarate and his leftist colleagues have filed a bill seeking to repeal the fuel tax provisions of the TRAIN law.

Marikina Rep. Romero Quimbo, who heads the Liberal Party bloc in the House of Representatives, said while the administration is trying to “frame the 6.7-percent inflation in October in a positive light, the fact remains that it is still at a nine-year high and that our people continue to suffer from higher prices.”

“Until the government does more to address this fact, I will continue to press for the repeal of the anti-poor excise taxes on diesel and kerosene and for a more responsive mechanism for the suspension of all other fuel excise taxes imposed under TRAIN,” he said.

Quimbo said Duterte’s economic managers continue to downplay the negative impact of TRAIN on the increase in consumer prices.

“These are the same people who grossly underestimated the inflationary effect of fuel excise taxes under TRAIN,” he added.

As a deputy speaker under the leadership of then speaker Pantaleon Alvarez, Quimbo supported the passage of the TRAIN law. He now considers himself as a minority member trying to unseat Minority Leader Danilo Suarez.

Pro-administration Rep. Henry Ong of Leyte urged the President to suspend regulations implementing the tax provisions of the law.

“President Duterte cannot amend the TRAIN law because only Congress can do that, but he can order the Department of Finance (DOF) to suspend the implementing revenue regulations of the Bureau of Internal Revenue while those regulations undergo revisions to cushion the inflationary impact,” he said.

He said the Chief Executive should scrap fuel levies imposed this year and the increase that is set to take effect in January.

Administration officials have said it would take an amendatory law for them to stop collecting taxes imposed under TRAIN this year.

TRAIN 2 to create jobs

As this developed, DOF officials said yesterday the Duterte administration’s second tax reform package being pushed in Congress will not lead to increased unemployment but will actually create at least 1.4 million jobs over the next 10 years.

Contrary to what some sectors are claiming, DOF Undersecretary Karl Kendrick Chua said the measure – Tax Reform for Attracting Better and High Quality Opportunities (TRABAHO) – allows businesses to retain more capital that could be used for expansion that creates more jobs.

“We expect the TRABAHO bill to generate at least 1.5 million new jobs in the next 10 years... with them having new capital to expand that activate employment multipliers,” Chua told reporters.

Various sectors, including those in exports and electronics, have expressed apprehensions the bill will lead to layoffs or even business closures with the removal of certain tax incentives.

The bill seeks to reduce the corporate income tax from the present 30 percent to 28 percent in 2021 all the way to 20 percent by 2029 that is expected to benefit some 250,000 firms or 98 percent of all corporations, the bulk of which are micro, small and medium scale enterprises (MSMEs).

It also proposes sunset provisions on tax incentives and discounts enjoyed by some industries and corporations for decades and replace these with a performance-based, time-bound and transparent incentive system.

The bill has passed the House of Representatives but faces opposition from senators, who are claiming it would lead to business closures.

Chua said some sectors have been enjoying tax incentives for 20, 30 and 40 years and it’s time for them to give back to the country that allowed them to grow and flourish.

He said industries and corporations that still need help or have proven their significant contributions to the economy will have their fiscal incentives retained.

He also said the measure seeks to increase incentives for firms that set up or relocate to rural areas to allow wealth to spread to the countryside.

“We will continue to dialogue with our senators and other stakeholders on the importance and urgency (of TRABAHO),” Chua said.