Sotto files Senate version of TRAIN 2

Published August 2, 2018, 5:57 PM

by Roel Tibay

By Hannah Torregoza

Senate President Vicente Sotto III on Thursday formally filed the Senate version of the second tranche of the Tax Reform for Acceleration and Inclusion (TRAIN) which President Rodrigo Duterte has earlier certified a priority legislation.

Senator Vicente “Tito” Sotto III gestures after elected as a newly Senate President at Senate Building in Pasay city, May 21,2018.(Czar Dancel)
Senator Vicente “Tito” Sotto III
(Czar Dancel / MANILA BULLETIN)

Sotto filed the 87-paged Senate Bill No. 1906, entitled “An Act Reforming the Corporate Income Tax and Incentives,” in support of the Duterte government’s thrust to introduce tax reforms in the country to generate more revenues for its infrastructure programs.

The second tranche of the tax reform program specifically seeks to lower corporate income tax rates and rationalize certain fiscal incentives given to investors.

The measure specifically seeks to amend 31 provisions of the National Internal Revenue Code of 1997 in particular Sections 5, 6, 20, 22, 25, 27, 28, 34, 40, 50, 73, 112, 119, 204, 220, 222, 237, 237-A, 250, 255, 256, 257, 258, 260, 261, 262, 263, 264, 265, 266 and 275.

“For the past two to three decades, there are 654 firms enjoying incentives from the government. Thus, it is high time to have a tax incentives system that is performance-based, targeted, transparent and time-bound in order to ensure that the Filipino people will gain from every peso that the government gives to the firms registered in the investment promotion agencies (IPAs),” Sotto said in the explanatory note of the measure.

“The measure being proposed will simplify the tax system to avoid tax evasion, and providing higher penalties to tax violations offenders,” the Senate leader said.

Sotto earlier volunteered to take sponsor the counterpart measure after no other senators are willing to sponsor the TRAIN 2.

Some senators are lukewarm with the TRAIN 2 proposal as they accused state economic managers of failing to be upfront on the inflationary effect of the first package of the TRAIN law, which resulted to higher prices on fuel, rice and other basic services and commodities.

This after the targeted 3.7 percent inflation rate set by the Department of Finance (DOF) ballooned to 5.2 percent.

But Sotto, who earlier had meetings with DOF officials, observed that the TRAIN 2 package has no inflationary effects.

“Considering that this is a revenue neutral tax measure, it will not have any inflationary effects but it may one way or another provide support to some 90,000 plus SMSEs (small, and medium-sized enterprises) to be covered by this Act,” Sotto said.

“I, therefore, urge my colleagues to support the urgent passage of this important measure,” he stressed.

Sotto said that while the purpose of the corporate income tax (CIT) imposed on corporations provides revenue for the government, it is about time that the government lowers the corporate income tax from the current 30 percent to 25 percent while expanding the tax base.

He said this can be done by repealing 123 special laws on investment tax incentives and consolidate into a single omnibus incentives, provided through this bill, and through the repeal of the National Internal Revenue Code exemptions of government-owned and controlled corporations (GOCCs), proprietary educational institutions and hospitals, regional or area headquarters (RHQs), regional operating headquarters (ROHQs), income of resident foreign corporation from foreign currency transactions, non-resident cinematographic film owner, lessor or distributor and owner or lessor of vessels, aircraft, machineries and other equipment.

“Moreover, through this bill, the existing investment tax incentives shall not be removed, but it will be rationalized,” he said.

Though he voted against the first tranche of the Tax Reform for Acceleration and Inclusion (TRAIN) law, Senator Panfilo “Ping” Lacson said he is willing to keep an open mind on TRAIN 2.

Lacson said that based on the briefing that he got from his staff, TRAIN 2 is similar to a measure he is pursuing which seeks to lower the value-added tax (VAT) from 12 percent to 10 percent.

“I’m willing to have an open-mind, precisely because it has similarities to the measure I am pursuing which seeks amendments to the value-added tax (VAT),” Lacson said in a Kapihan sa Senado forum.

“Ako I’m willing to have an open mind especially during the committee hearings and deliberations on the Senate floor.. Of course, it was the Senate president who sponsored so more or less, I am inclined to support him,” he stressed.

 
CLICK HERE TO SIGN-UP
 

YOU MAY ALSO LIKE

["news"]
[2510866,2814292,2534630,2485825,2408462,2358243,2358052,2344118,2339143,2047660,1998697,996820,995332,995948,995006,994327,994303,993947,993860,993770,993529,993383,993285,798318,2848354,2848346,2848341,2848331,2848323,2848327]