Gatchalian: Senate reluctant to pass second tax reform package

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Metro Manila (CNN Philippines, July 26) — The President has called for the swift passage of the second package of tax reform, but the Senate is not eager to accede, a senator said Thursday.

Senator Win Gatchalian, a member of the Senate Committee on Banks, Financial Institutions, and Currencies, said tackling the package was a "question of trust."

"Napaso na yung mga senators e [Senators got burnt]. Because in TRAIN 1, during the hearings, we were assured that inflation will not breach four percent," Gatchalian said.

"Now we're left here answering to the people... On top of that, the mitigating measures that we inserted in the bill are not being complied to date," he added.

The Tax Reform Acceleration and Inclusion (TRAIN) law comes in five packages, the first of which went into effect this year. Since then, inflation has hit a five-year record high at 5.4 percent, while lawmakers pointed to the executive department for being unable to roll out financial assistance.

The first tax reform package lowered personal income taxes, but imposed excise taxes on fuel, luxury motor vehicles, and sweetened beverages. The second package is expected to tackle corporate income tax rates and fiscal incentives.

In June, Budget Secretary Benjamin Diokno admitted the government fell short in providing for unconditional cash transfers to all beneficiaries. However, he promised they would be distributed soon.

The administration's economic managers maintain factors like the rising price of oil worldwide, not tax reform, are the main causes of inflation. Gatchalian believes they should have foreseen these factors too.

"That's why it's hard for us to talk about TRAIN (Package) 2 if there are a lot of unanswered questions in TRAIN 1," said Gatchalian.

Majority Leader Migz Zubiri said that the Tax Reform Acceleration and Inclusion (TRAIN) was not a priority in the Senate. Moreover, the bill has not been filed at the upper house.

This comes after President Rodrigo Duterte called on Congress to pass the second package by the end of the year. He also urged legislators to pass all the remaining packages, which are expected to be in Congress by the end of July. Diokno reiterated this call on Wednesday.

Gatchalian acknowledged this was an executive priority, but that he would approach the policy "very, very cautiously."

He added that it was possible to urge the government to suspend the second tranche of the excise tax on petroleum, which was provided for in the first package of the TRAIN Law. It is expected to take effect next year.

"We could suggest or even urge the administration to suspend the second tranche if ever inflation will go beyond a controllable point," said Gatchalian.