Tax reforms proposed by the government will make Philippine businesses more competitive, government and private sector officials said on Friday.
“Of course [it will]… Why? Our intention really here is to put the money where it could be really felt in the long term like infrastructure,” Finance Assistant Secretary Maria Teresa Habitan said during a discussion organized by the Chamber of Commerce of the Philippine Islands.
Quirino Rep. Dakilo Carlo Cua, chairman of the House Ways and Means Committee and one of the authors of the proposed Tax Reform for Acceleration and Inclusion (TRAIN) Act, said the aim of raising consumer spending power would benefit companies.
“Businesses can compete because more disposable income in the family means more profits for firms. Although you have to pay taxes, in the long run, you have better profits,” Cua said.
Raymond Abrea, chief strategy officer at the Abrea Consulting Group, also sees a more competitive environment for Philippine firms but he qualified that Filipinos must also change their mindsets with regard to patronizing businesses.
“Each of us can change. If we issue receipts and ask for receipts and do not deal with smugglers, we can really kill the underground economy by supporting legitimate businesses,” he said.
The Finance department reiterated that the proposed Train Act was a pro-poor and progressive measure that would make the tax system simpler, fairer and more efficient.
The measure was overwhelmingly approved by the House of Representatives on May 31 as House Bill (HB) 5636 that consolidated Cua’s bill — HB 4774–with 54 other tax-related proposals.
The Senate is now tackling HB 5636 along with Senate Bill 1408, which contains the Finance department’s original proposals and filed by Senate President Aquilino Pimentel III 3rd.
The government wants to lower personal income taxes, expand the coverage of the value-added tax, increase excise taxes and improve tax administration in order to help fund the Duterte administration’s massive infrastructure program.