Senators still skeptical over TRAIN 2

Published August 1, 2018, 4:22 PM

by AJ Siytangco

By Hannah Torregoza

Senator Juan Edgardo “Sonny” Angara on Wednesday said it is too soon to say that the Senate version of the second tranche of the Tax Reform for Acceleration and Inclusion (TRAIN) law would be the “right package” acceptable to all senators.

Angara, Senate ways and means committee chair, said that as far as he is concerned, he would rather study the measure to be filed by Senate President Vicente Sotto III on package 2 of the TRAIN law first before making any assessment.

Senator Juan Edgardo “Sonny” Angara (Facebook / MANILA BULLETIN)
Senator Juan Edgardo “Sonny” Angara

“We can only know after having a few hearings on it if it’s the right package. I assume what he’ll be filing is what the DOF (Department of Finance) is recommending,” Angara told reporters in an interview.

Package 2 of the TRAIN Law, which President Rodrigo Duterte pushed during his third State of the Nation Address (SONA) specifically, seeks to lower the corporate income tax paid by some 95 percent of businesses and, at the same time reform the fiscal incentives given to investors by various agencies of government.

Sotto, earlier, said state economic managers should discuss with senators the salient provisions of TRAIN 2 then later on said, he would file the measure after saying he is ready to push for its passage after being briefed by the DOF on the benefits of the measure.

Angara, however, said he agrees with all stakeholders’ observation that the tax reforms under the second tranche is politically sensitive and thus, the need for the Senate to thoroughly scrutinize package 2 of the TRAIN law.

“Maybe, this is politically sensitive because it’s economically sensitive. Dahil ang pinag-uusapan dito negosyo, trabaho, presyo. At sa parte naman ng gobyerno, ang pinag-uusapan ay yung reputation ng ating gobyerno. Kapag binabago ang mga panukala o ang pamantayan ng pag-i-invest. So yun ang mga nakasalalay dito kaya siguro sinasabi ng iba na ito’y sensitibong bagay (Because we are talking about businesses, livelihood, prices. And on the part of the government, we are talking about the reputation of our own government, once investment rules are changed. So those are the things at stake here and that may be the reason why some are considering this a sensitive issue),” he said.

While majority of the senators are skeptic about the TRAIN 2, Angara said it is philosophically agreed by the members of the Senate that there is a need to introduce reforms in the incentives being given.

So while the DOF seems bent on shortening the period of incentives given, others argued that businesses should be given sufficient time to prepare so they would not go bankrupt and workers would not lose jobs.

“Those are the arguments we’ve been hearing. And yes, we have to be conscious of that. Of course, what we have to take into consideration is the fact that we don’t want people losing their jobs but rather them having more jobs,” Angara said.

“So I think it is essential for us to look at the whole picture. The ideal outcome is to introduce reforms that would create more jobs and improve the Philippines’ reputation among investors,” he said.

Sen. Paolo “Bam” Aquino IV echoed Angara’s position saying the primary issue hounding TRAIN 2 is the possible loss of jobs for Filipinos who are already reeling from the inflationary effect of TRAIN 1 or the first package which the Senate signed into law last year.

“Many of these industries and chambers of commerce are already approaching senators and warned that if ever their incentives are changed, they might choose to leave the country. So its possible a lot of people will lose jobs,” Aquino said in a separate interview.

That’s why Aquino said he doesn’t see the need to rush the passage of the TRAIN 2 measure which President Rodrigo Duterte has certified as urgent during his recent State of the Nation Address (SONA).

“To be very frank, the timetable given is so short. And we have the proposed 2019 national budget to contend with. So I really doubt we can finish that by the end of the year,” he said.

“It would be best if the government first respond to the issues hounding the implementation of TRAIN 1 before we move on to TRAIN 2. Now that prices of basic goods and commodities have soared, what is the government doing to offset it? After inflicting much damage, you cannot just say, let’s move on to the next,” Aquino stressed.

Sen. Cynthia Villar said she would be looking at the specific provisions of the TRAIN 2 bill and what are the possible compromises lawmakers and the government economic managers could consider.

But when asked if she is open to the removal of tax incentives, Villar said this would depend on the type of industries that might be affected if ever the TRAIN 2 pushes through.

“If they will remove the incentives of industries that employ many workers that could have an effect. What we are open to is for them to remove the incentives of those that have no effect on employment because if it will affect employment, that’s going to be dreadful,” Villar told reporters also in an interview.

And if the cost of lowering corporate income tax will result in reduction of employment, Villar said that would be another problem.

“So we will see. We will study because we can conduct research on our own,” Villar said.