MANILA, Philippines – The Department of Finance (DOF) expects around 1.4 million jobs to be created between 2021 and 2029, should the Tax Reform for Attracting Better and High Quality Opportunities (Trabaho) bill be enacted into law.
The measure aims to cut the country's corporate income tax (CIT) by a third to 20% and give out fiscal incentives to "deserving" industries.
DOF estimates show that the lowered CIT rates would free up more capital for firms to invest and hire more workers.
"With lower tax rates, such a proposal is hardly inflationary while creating over a million jobs over the medium term as firms expand with more money at their disposal," Finance Undersecretary Karl Chua said.
The DOF projected an increasing trend for the number of jobs that would be created for every 2-percentage-point drop in the CIT rate.
"At a 26% CIT rate in 2023, for instance, an additional 171,940 jobs will be created. The numbers will then increase to 252,031 additional jobs in 2025; by another 361,767 in 2027; and 511,021 more in 2029 – or a total of 1.4 million jobs over the 10-year period," the DOF said in a statement.
The agency also emphasized that some 90,000 small and medium enterprises (SMEs), and some of the hundreds of thousands more micro-enterprises would benefit from reduced CIT rates and have more legroom to expand.
"This pro-investment tax reform package is seen to be even more attractive to firms because it will give them additional incentives on labor, domestic input, and training under the proposed menu of tax incentives," Finance Assistant Secretary Tony Lambino said.
The agency has been unable to convince various businesses, particularly economic zones, that the Trabaho bill would be beneficial. (WATCH: Rappler Talk: Dissecting the Trabaho bill)