It is unlikely that Trabaho's account will cause job losses, says DOF
(philstar.com) – August 22, 2018 – 4:42 PM
MANILA, Philippines – Trabaho's account is unlikely to cause job losses, but the government is ready to take measures to help employees affected by the measure, the Finance Department said Wednesday.
Finance Undersecretary Karl Chua said that the Congress has proposed setting up emergency funds to help employees who may be displaced as soon as "unnecessary" tax incentives have been removed.
"Unlikely, no, anything is possible but it is unlikely. Anything is possible," Chua told journalists in Malacañang when asked if the Trabaho bill would cause job losses.
"It's the Congress that proposed the fund in case I can not guarantee 100 percent, but based on the reform we've presented, this does not seem to be the case, at least we have something to offer. It's like a contingent fund in case there are people who will be displaced, "he added.
Chua said the fund is only a "precautionary movement" and that his agency has not estimated the number of jobs that could be lost because of the bill. He said the adjustment fund would be used to re-educate and provide cash subsidies to employees who might have been affected.
Trabaho's account, formerly known as the package two of the Tax Reform and Inclusion Tax, aims to reduce the rates for corporation tax from 30 percent to a minimum of 20 percent to bring them closer to regional averages. It is also intended to rationalize tax incentives by removing unnecessary tax benefits.
Critics have expressed concern that the elimination of some tax incentives would discourage companies from investing in the country and causing job losses.
However, financiers think that companies continue to invest in the Philippines despite the abolition of some tax incentives because they are inherently profitable and there is a certain market for their goods or services.
"Our proposal is about the necessary incentives, we will continue to help, we see no job losses, the unnecessary tax incentives will be gradually lifted … I think if there is job loss, very minimal," said Chua. .
Tony Lambino, deputy finance secretary, said that the reduction of corporation tax would benefit micro, small and medium-sized enterprises, the source of the livelihood of the majority of Filipino workers.
"Actually, micro-enterprises will have more money in this case, so that they can improve their productivity and enable them to expand. They will hire more employees so that we (expect) that Trabaho's account will be positive. "Lambino said.
Chua said that the lower corporation tax rate allows small businesses to generate huge savings that they can use to expand and create jobs.
"All in all, even if there is potential job losses in one or two sectors, it will make a positive contribution to the economy as a whole," the finance official added. – Alexis Romero