Leaders of foreign business institutions and Cabinet officials have reiterated their support for the Tax Reform for Acceleration and Inclusion Act (TRAIN) as a key factor in transforming the country into an investment-led economy that truly benefits the poor and grows a strong middle class. Julian Payne, the president of the Canadian Chamber of Commerce of the Philippines, said the TRAIN will benefit people with “lower-level incomes” and make the tax system more progressive.
“We applaud the administration for taking the initiative and embarking upon this major effort. We definitely support the fact that [TRAIN] will maintain a responsible fiscal framework that will include funding for the public sector, for fiscal and social infrastructure, which will benefit the poor as well,” said Payne, who represented the Joint Foreign Chambers of the Philippines (JFC) at one of the earlier hearings of the Senate ways and means committee on the proposed tax reform bill.
The Senate ways and means committee began the deliberations on the TRAIN, which was filed in the chamber by Senate President Aquilino Pimentel III as Senate Bill (SB) No. 1408, last March 22.
The Senate began conducting plenary debates on the revised measure, SB 1592, on Nov. 22 and finally approved it with substantial amendments last Nov. 28.
Meanwhile, House Bill (HB) No. 5636, is the TRAIN version approved by the House of Representatives last May 31.
The bicameral conference committee tasked to reconcile the conflicting versions of the House and Senate versions of the TRAIN began its meeting last Dec. 1. It is expected to wrap up its final report this month.
Finance Secretary Carlos Dominguez III has expressed hopes that the bicameral conference committee could submit its final reconciled version of the TRAIN to Malacanang by the second week of December so that President Duterte could sign it into law before the Christmas holidays, in time for its publication before the end of the year and its effectivity by Jan. 1.
Payne said the JFC is also backing “the intended reduction in corporate and personal income taxes in the sense (that it will make us) competitive with our ASEAN neighbors” and develop a business environment that will encourage foreign investors.
Wayne Bradford, a senior advisor of the International Tax and Investment Center, commended the Department of Finance (DOF) led by Secretary Carlos Dominguez III for its thorough work on TRAIN, which “is generally consistent with important economic principles that guided most tax reforms worldwide.”
“It aims to lower marginal tax rates for most taxpayers. It broadens the tax base and attempts to simplify the system that is covered in your tax bill Package One,” said Bradford.
He said the Center also fully supports “the DOF’s original (proposed) petroleum tax increases” as well as the fuel marking and other activities that aim to combat oil smuggling.
The TRAIN, which aims to slash personal income taxes and raise additional revenues for the government’s unmatched spending program on infrastructure and human capital development, has also garnered the support of the local business sector and civil society organizations.
Secretary Ernesto Pernia said at the same hearing that implementing the TRAIN will benefit the economy with “an increase of 1.4 percent” GDP growth per year and generate 1.1 million new jobs as this measure would help support the government’s massive infra program.
“I think that’s going to be a big boost to the economy in general. Also in terms of employment generation, many of these beneficiaries of additional employment will be the poor,” Pernia said.