2nd tax package, P45B for safety nets & # 39;



In the midst of fears of large job losses, an approved version of the "Trabaho" law granted a total of P45 billion over a five-year period to "compensate" workers and businesses that would be harmed by tax reform.

This was according to the tax package recently adopted in the Lower House, including a section in which safety nets are discussed for those who may be affected by the law.

Called the structural adjustment fund, it was meant to "compensate the displaced by the rationalization of tax incentives," according to the law.

The tax differences package will reduce corporation tax in the country, which is still the highest in Southeast Asia today. The same package will, however, rationalize tax benefits for investors.

The compensation is included in the bill, despite claims by 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 would be allocated over the next five years for displaced persons and companies in the form of money fairs and training programs.

The bill passed for the control of the legislators in the house, despite a recent admission from the Department of Labor and Employment (Dole) that the government has not yet completed an investigation into the effects of the law on employment.

The Senate still has to hand over its own version of the bill. In a statement at the end of last month, Seny Sonny Angara said that the tax package would not go ahead unless the government presented final data on the employment impact.

"I am surprised that the lower house passed this measure without such a study, and the government should really take this issue seriously," he said.

Support funding could be obtained by critics, who have spoken out loudly against the slow implementation of the safety nets under the TRAIN law, the first tax package of the Duterte administration.

The TRAIN law reduced income tax, but increased the consumption taxes on some goods, which in part caused the high inflation that consumed the purchasing power of the public.

Broken down: this P5 billion fund means that Dole would have an annual funding of P500 million in the form of cash subsidies or other support programs for displaced workers or companies, and another 500 million Pm € for the training of employees who could lose their job due to tax reform.

In addition, the bill also includes a support fund of P15 billion, which would be used to develop the infrastructure around and within special economic zones and free ports. This is not allocated annually.

However, most of the total funding would only be spent on a skills upgrading program for the information technology and business outsourcing sector, the largest employer in the private sector.

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

Finance Undersecretary Karl Chua informed the researcher earlier that the government would agree to provide funding only if the industry would support the tax package despite the reserves of the latter.

The Philippines Information Technology and Business Process Association, who considers both vocational training and tax benefits important, has not responded to requests for comments.

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