spot_img
27.6 C
Philippines
Friday, March 29, 2024

Dominguez asks Congress to pass second Train package

- Advertisement -

Finance Secretary Carlos Dominguez III asked lawmakers Tuesday to approve the second package of the Comprehensive Tax Reform Program that aims to reduce the corporate income tax and reform the investment incentives system.

Dominguez, who attended the first hearing called by the House committee on ways and means to discuss House Bill No. 7458, also allayed apprehensions over the impact on prices of the first tax reform package, which he said contributed less than a half-percentage point to April’s inflation rate.

Dominguez said the first package”•the Tax Reform for Acceleration and Inclusion law”•accounted for only four-tenths of a percent in April’s inflation rate of 4.5 percent. He said this meant that for every peso increase in prices, only 9 centavos could be attributed to the Train law.

“Train has been unfairly blamed for the elevated inflation rate we are currently experiencing. By our estimates, fully two-thirds of last April’s 4.5 percent inflation rate is typical of a rapidly expanding economy. The remaining is due mainly to the sharp increases in key imported commodities specifically oil, the realignment of currency exchange rates and a robust increase in domestic demand,” Dominguez said.

“At any rate, the inflationary impact of Train is expected to diminish over the next few months,” Dominguez said.

- Advertisement -

Rep. Dakila Carlo Cua, the committee chairman, along with deputy speaker Raneo Abu and deputy majority leader Aurelio Gonzales Jr.m filed HB 7458 that aims to cut the corporate income tax and reform the investment incentives system.  This measure represents Package 2 of the Duterte administration’s tax reform program.

Dominguez said the overhaul of the corporate tax structure, particularly the system on the grant of investment incentives, were necessary given these defects that prevented the Philippines from attracting more foreign direct investments:

Small and medium enterprises are currently paying a CIT rate of 30 percent, the highest in Asean. Meanwhile, a complicated tax incentive regime with 14 investment promotion agencies and 123 laws outside the tax code grant various forms of investment incentives on large foreign and domestic corporations.

Dominguez also thanked the leadership and members of the House for passing the Train law, which he said had brought immediate relief to, and increased the purchasing power of, 99 percent of the country’s salaried workers in the form of personal income tax cuts.

He said the Train law also allowed the Bureaus of Internal Revenue and of Customs to exceed their respective collection targets in the first quarter this year.

Dominguez said the biggest impact of Train was not on the prices of basic goods but on non-essential commodities like tobacco and sugary beverages, whose tax rates were made intentionally “punitive” to help safeguard the health of Filipinos.

He said to cushion the effects of elevated inflation on vulnerable sectors, the government was implementing the unconditional cash transfer program while encouraging more investments to meet the surge in domestic demand.

- Advertisement -

LATEST NEWS

Popular Articles