Will TRAIN 2 Mean More Expensive Books? Here's Why You Shouldn't Panic
You've probably seen the posts circulating online raising the alarm on a particular section of the TRAIN 2 bill that has just been approved by Congress. You may even have signed this petition to protest the provision.
In short, the TRAIN 2 tax reform bill, which has been renamed Tax Reform for Attracting Better and High Quality Opportunities (TRABAHO), has an entire "repealing clause" which lists older provisions to be struck down under this bill. As a number of organizations and individuals have pointed out, this includes RA 8047, the Book Publishing Industry Development Act.
The fear is that, in repealing RA 8047, the government will also cancel the incentives and tax exemptions for the book publishing industry.
As the TRABAHO bill passed its third and final reading in the House of Representatives, does that mean that we can look forward to a sharp price increase on our books?
Perhaps not, clarifies Atty. Euvimil Niña Asuncion, Director for Legal and Legislative at the Strategy, Economics and Results Group of the DOF. In a series of comments on Facebook, Asuncion fielded questions from book industry professionals to clarify the reason for the apparent repeal.
"Sale and importation of books are vat-free because of Section 109 of the Tax Code. This has not been repealed nor amended. The importation of books is also customs-duty free under Section 800(T) of the Customs Modernization and Tariff Act," Asuncion wrote. "Please note that while Section 12 of RA 8047 is being repealed, if book publication is in the Strategic Investment Priority Plan, local publishers will continue to enjoy incentives on importation of raw materials for book publication. Aside from this, publishers may even enjoy the other incentives under the new single menu of incentives which Package 2 has."
For those looking for further detail, Asuncion provides these three points:
"1. With or without RA 8047 (or the provisions on SIPP in TRABAHO or even the Florence Agreement), the Tax Code and the Customs Modernization and Tariff Act have provisions exempting the sale and importation of books from VAT and customs duties, respectively.
2. The 2017 IPP provides incentives to publishers of books. It is in BOI’s discretion if they will still include the same in the SIPP. Nonetheless, if it is not, we go back to no. 1. VAT-exempt and customs duties exempt pa rin ang sale and importation of books.
3. The Florence Agreement is part of the law of the land. We may choose to revoke our acquiescence to it (that is the prerogative of any sovereignty) but no administration in their right mind would. (Education is a good externality you want to promote.) In the unlikely case we do revoke adherence to the Agreement, you still have no. 1. VAT-exempt and customs duties exempt pa rin and sale and importation of books."
In short, regardless of TRABAHO, the book industry's exemptions are guaranteed under the Tax Code and the Customs Modernization and Tariff Act (CMTA), both of which remain unchanged under TRABAHO. Asuncion further points out that TRABAHO may even expand on the repealed Book Publishing Industry Development Act.
If this sounds complicated, well, that's tax law for you. But Asuncion gives us the most categorical assurance we've heard so far that the current tax reforms will leave our books alone. (You can read the entire thread on Aklatan Bookstore's Facebook page.)
Of course, there's no harm in signing the petition, if only to signify your support for the Philippine book industry and to show your vigilance as citizen. But for now, it does look like our books remain untouched under the current tax reform proposals. Now there's only that pesky inflation that we have to deal with.