No job loss expected under TRAIN 2 but contingency plan in place — DOF
Finance officials are not expecting any loss of jobs under the second package of the government’s new tax reform plan.
Cash grants, however, would be put into place as part of a contingency plan if “minimal” or “temporary” job losses will be reported.
“Wala po kaming nakikitang job losses,” Finance Undersecretary Karl Kendrick Chua said in a press briefing on the second package of the Tax Reform for Acceleration and Inclusion (TRAIN 2) at Malacanang on Wednesday.
“Kung may job loss, very minimal. Ang ginawa po ng TRABAHO Bill ay naglaan po sila ng isang adjustment fund to retool and provide cash grants to workers who may be affected,” Chua assured. “’Yung fund is precautionary motive para sure tayo just in case. Wala pa tayong mine-measure na job loss.”
Likewise, Chua allayed the fears of members of the business sector that scrapping tax perks that are considered by the Department of Finance (DOF) as “unnecessary” would result in job loss.
“Meron po tayong napakaraming examples of reforms in the past wherein the initial fear of job loss proved to be very wrong. Halimbawa po, ‘yung niliberalize ang airline industry at telecoms industry,” Chua said.
“Ang sabi po ng PLDT and Philippine Airlines in the 90s, it will destroy many jobs, pero ang totoo po, mas lumaki ang kanilang mga korporasyon, mas maraming jobs na na-create in other industries,” he noted.
The Finance undersecretary also explained that there was a need to strike a balance for small and large businesses.
While the corporate income tax in the country was high, Chua noted the low “revenue productivity” and flat revenues due to unnecessary tax incentives and exemptions to big businesses.
In 2016, the DOF said corporate income tax revenues, with its 30 percent corporate income tax rate, recorded only 3.7 percent of the Gross Domestic Product and 12 percent of revenue productivity.
However, in Vietnam, where a 20 percent corporate income tax rate is imposed, about 7.1 percent of the Gross Domestic Product was recorded for corporate income tax revenues while revenue productivity was recorded at 35.6 percent.
“Mataas ang ating rate pero napakakitid ng ating tax base. Ibig sabihin, maraming exempted. Sa Vietnam naman, mababa ang tax rate, pero halos lahat, nagbabayad. Konti lang ang exemption, kaya mas patas,” Chua said.
“Halos lahat ng small and medium enterprises, 90,000 po sila, ay nagbabayad ng 30%, pero ‘yugn may incentives na malalaki, mga foreign, halos 0 to 5% on gross lamang. In 2015, P301 billion ang incentives na binigay natin,” Chua said.
Under TRAIN 2, the Finance official said that incentives should be performance-based, targeted, time-bound and transparent.
“Kung masusunod ito ay tuloy po ang pagbibigay ng incentive, pero kung hindi po masusunod ito, ay dapat bawasan na natin kasi may mas malaking dahilan kung bakit natin kailangan idaan ang pera sa ibang pangunahing programa,” Chua said.
“Meron po tayong napakakumplikadong tax incentive system. Tayo lang ang nag-iisang bansa sa ating region na nagbibigay ng incentives na forever. Ang dulot ng ating dalawang sistema ay malaki ang hindi pagkakapantay pantay,” he said. /vvp
