Peza gives up on Trabaho bill talks with DOF

The Philippine Economic Zone Authority (Peza) has given up on asking the Department of Finance (DOF) to spare the agency from the next tax reform plan, opting instead to go directly to President Rodrigo Duterte.

Peza Director General Charito Plaza said Wednesday that she will not be bullied by government officials who asked her to shut up after expressing strong reservations against the Tax Reform for Attracting Better and High-quality Opportunities (Trabaho) bill.

She first made mention of this in her speech at the Economic Journalists of the Philippines (Ejap) Awards Night, where she reiterated her agency’s battle cry to maintain status quo.

“Enough of the scolding. Enough of the bullying from other leaders of the government to keep our mouth shut. I am now very vocal to speak out to the President,” she said.

On the sidelines of the event, she told reporters that she is still hoping that Mr. Duterte would understand Peza’s concerns.

Peza, she said, is more in tune with what happens on the ground, compared to “technocrats like [those in the] DOF” who only think of getting more taxes.

“I am asking for a time to talk to the President. I still hope the President would understand especially now [when] the inflation [was partly] caused by the excise taxes in [the] Train [law],” she said, referring to the first tax reform package – Tax Reform for Acceleration and Inclusion  (Train) law – pushed by Duterte’s economic managers. The Train law has been in effect since January 1, 2018.

This develops as lawmakers mull over the divisive Trabaho bill, the second tax reform package of the Duterte administration.

The bill will slowly lower the corporate income tax here in the country, while rationalizing the incentives offered to investors. The latter part will leave Peza badly hit.

It was passed in the House of Representatives even if government officials later admitted they have not finished any analysis on how jobs would be affected at the time of Trabaho bill’s passage.

Asked to comment on this, Plaza said: “That’s why it becomes more dangerous. It would be too late to say, ‘We’re sorry’. Once exporters pull out, we cannot get them back.”

Plaza is almost alone in this fight, noting how she does not have the backing of economic managers. When asked if Peza still engages with DOF, she said she has given up on talks after realizing their pleas fell on deaf ears.

“I’ve given up [on talks with DOF] that is why I have to speak up. Our industries have already given up,” she said.

Peza recalled how industry groups tried to reach out to DOF to air their side, back when the second tax reform package was still a DOF proposal.

‘They hear but they never listen’

The uncertainty over the fate of tax perks in the country has been blamed for the drop in investment pledges under Peza. According to media reports, pledges dropped by more than half in the first nine months of the year, falling to only over P87 billion from close to P200 billion in the same period in 2017.

“Our industries thought their sentiments were being heard. But that’s not the case. What came out in the Trabaho [bill at the House of Representatives] is still almost the same as the original [DOF version],” she said.

Thus, the sentiments and even compromises of industry groups were not considered in the final output, according to the Peza chief.

“Our impression is they hear but they never listen. They still stick to what they believe what must be implemented,” she said. /kga