2nd tax package allots P45B for ‘safety nets’

Amid fears of massive job losses, an approved version of the “Trabaho” bill allotted a total of P45 billion over a five-year period to “compensate” workers and firms that might get harmed because of tax reform.

This was according to the tax package recently passed in the House of Representatives, which included a section discussing safety nets for those who might be affected by the bill.

Called the structural adjustment fund, it was meant to “compensate workers that may be displaced by the rationalization of fiscal incentives,” the bill read.

The divisive tax package will lower the corporate income tax in the country, which today is still the highest in Southeast Asia. The same package, however, will rationalize tax incentives offered to investors.

The compensation was inserted in the bill despite claims from lawmakers and some government officials that the second tax reform package of the Duterte administration would create jobs and not lose them.

According to the house bill, a total of P5 billion over the next five years would be allocated for displaced workers and companies in the form of cash grants and training programs.

The bill passed the scrutiny of lawmakers in the lower House despite a recent admission from the Department of Labor and Employment (Dole) that the government has not yet completed a study on the impact of the bill on jobs.

The Senate has yet to pass its own version of the bill. In a statement late last month, Sen. Sonny Angara said that tax package would not proceed unless the government presented a definitive data on job impact.

“I’m surprised that the lower House passed this measure even without such study. The government should really take this issue on jobs seriously,” he said.

The support funding might strike a chord among critics, who have spoken loudly against the slow implementation of the safety nets under the TRAIN law, the first tax package of the Duterte administration.

The TRAIN law lowered the personal income tax, but raised consumption taxes on some goods, which partly caused the high inflation that ate up the purchasing power of the public.

Broken down, this P5 billion fund means Dole would have P500 million worth of annual funding in the form of cash grants or other support programs for displaced workers or firms, and another P500 million funding for the training of workers who might lose their jobs due to tax reform.

On top of these, the bill also includes a P15-billion support fund, which would be used to develop the infrastructure around and inside special economic zones and free ports. This will not be allocated on a yearly basis.

Bulk of the overall funding, however, would go exclusively to a skills upgrading program for the Information Technology and Business Process Outsourcing industry, the country’s largest private sector employer.

The industry, whose members are mostly located in economic zones where they are given tax incentives, could get P5 billion every year for the program, a total of P25 billion in five years.

Finance Undersecretary Karl Chua previously told the Inquirer that the government would agree to give the funding only if the industry would support the tax package, despite the latter’s reservations.

The Information Technology and Business Process Association of the Philippines, which regards both job training and tax perks important, did not respond to requests for comment.