MANILA Senate President Vicente Sotto III has filed a bill, pushing for the second package of tax reforms proposed by the Department of Finance (DOF).
In an explanatory note for his proposed bill, Sotto adopted the DOF proposals to cut down the corporate income tax (CIT) rates and to rationalize incentives given to businesses.
“(I)t is about time that the government lowers the corporate income tax from the current 30 percent to 25 percent, while expanding the tax base by repealing 123 special laws on investment tax incentives and consolidate into a single omnibus incentive,” the note read.
Such proposals were submitted by the DOF to Congress in January, seeking to plug leakages such as tax holidays and no time limits which costs the government over P300 billion yearly in foregone revenues.
Sotto also included in his proposal the amendment or the repeal of over a hundred special laws on investment incentives, which was also earlier proposed by the DOF.
“(I)t is high time to have a tax incentives system that is performance-based, targeted, transparent, and time-bound,” Sotto said in his explanatory note.
“Also, this measure being proposed will simplify the tax system to avoid tax evasion, and providing higher penalties to tax violations offenders,” he added.
Sotto’s proposal came a week after he said majority of senators were not inclined to support TRAIN 2 after the promises and forecasts of economic managers during TRAIN 1 deliberations failed to materialize.
This developed as inflation accelerated to 5.2 percent in June, the fastest level in at least five years, and higher than the 2- to 4-percent target range of the government.
Senate Majority Leader Juan Miguel Zubiri last week said no senator wanted to sponsor TRAIN 2, citing the lack of support from other senators.
“It is quite unfortunate that the targeted 3.7 percent inflation rate set by the Department of Finance ballooned to 5.2 percent. The offshoot, however, of the targeted effects of TRAIN 1 to our inflation have been caused by other external factors not related to it,” Sotto said in his note.
“This untimely economic phenomenon brought about misconception that the TRAIN 1 brought to the continuing rising of prices, where in fact the tax reform in quantifiable term, only contributed 0.4 out of the 5.2 percent of the inflation rate that is hurting our citizens,” he added.
President Rodrigo Duterte signed the first package of the TRAIN Law on December 19, effectively reducing the personal income tax (PIT) and the expanding the value-added tax (VAT) base. (GMA News)
