By Elijah Felice Rosales, July 23 2019; Business Mirror

Image Credit to Business Mirror

ECONOMIC zone locators will challenge President Duterte’s endorsement of the Tax Reform for Attracting Better and High-Quality Opportunities (Trabaho) bill, and have vowed to dialogue with senators and ensure its nonpassage.

In interviews with the BusinessMirror, leaders of various industry groups said the President’s endorsement of the Trabaho bill will not stop them from trying to persuade senators to do away with the measure. They admitted Duterte’s order to pass the measure carries weight, but its fate, whatever happens, stays with the hands of legislators.

Philippine Ecozones Association President Francisco S. Zaldarriaga said locators will keep briefing senators on the potential investment and job losses resulting from the rationalization of tax incentives as proposed under the, ironically named “Trabaho [Jobs]” bill.

“We will continue to speak to senators and convince them to vote against the Trabaho bill. Let’s see where our efforts go and see how independent-minded the Senate is in spite of the endorsement from the President,” Zaldarriaga said.

“The President’s endorsement of the Trabaho bill could be just a formality, as he is taking a cue from his finance officials who are for the rationalization of tax perks,” he added.

Danilo C. Lachica, president of the Semiconductor and Electronics Industries in the Philippines Foundation Inc., also said the battleground is in the Senate, where the Trabaho bill got stuck in the 17th Congress, resulting in its eventual
nonpassage. “We have to explain to the senators the severe impact on employment and foreign direct investments [of the Trabaho bill] just as we did in the 17th Congress,” Lachica said in a text message.

Dollar earners

The semiconductor industry is one of the country’s chief dollar earners, as their exports account for over 50 percent of Philippine shipments. Last year electronics exports grew 4.5 percent to $38.18 billion, from $36.53 billion in 2017, according to government records.

Lachica earlier told the BusinessMirror that the semiconductor industry is bound to shed off 144,000 workers in a span of five years should the Trabaho bill be passed.

The President in his fourth State of the Nation Address (Sona) on Monday appealed to lawmakers to pass the Trabaho bill, as well as the remaining packages of the government’s comprehensive tax reform program.

“I urge Congress to immediately pass package two of the comprehensive tax reform program, or the Trabaho bill, which will gradually lower corporate income tax and rationalize and improve fiscal incentives,” Duterte said.

The Trabaho bill is being opposed by economic zone firms, as it will strip away most of the tax perks that they enjoy at present, particularly the 5-percent tax on gross income paid in lieu of all local and national taxes.

Locators, particularly multinationals, warned that its passage could force them to move out of the Philippines and relocate to a more competitive economy in the region. Also, the uncertainty brought about by the Trabaho bill caused investments to the Philippine Economic Zone Authority (Peza) last year to decline 40.97 percent to P140.24 billion, from P237.57 billion in 2017.