Senate leaders are set to call a caucus on Tuesday, looking to hammer out a compromise to fast-track passage of two pending pieces of major legislation—the P4.5-trillion 2021 national budget bill and the long-awaited Corporate Recovery and Tax Incentives for Enterprises (Create) before lawmakers adjourn for their traditional yearend holiday recess.
In an interview with DWIZ over the weekend, Senate Minority Leader Franklin M. Drilon admitted finding “complicated provisions” in the administration-endorsed Create bill seen to trigger adverse effects on businesses and ultimately, the workforce.
“Masalimuot talaga ito dahilan sa maraming manggagawang apektado,” Drilon said. [This is really complicated as many workers will be affected.]
He noted that the Duterte administration is looking to reduce incentives in an urgent need to plug revenue loss, especially at a time the cash-strapped government has to continue shelling out huge funds for the Covid-19 response.
“The administration wants to reduce the incentives because there’s a lot of forgone revenue from taxes,” he said, partly in Filipino.
Drilon recalled that during a Senate hearing on the budget of the Subic Bay Metropolitan Authority, one “compromise” that was proposed is to determine whether to regulate incentives “for all, or distinguish between local manufacturers and exporters.”
Moreover, it was noted that a Fiscal Incentives Review Board to be set up under Create will determine what incentives to give, but this would mean taking away that authority from the governing board, including the Board of Investments.
On Friday, the fiscal watchdog Action for Economic Reform assailed senators for even considering what it called a “killer amendment” by way of the “grandfather rule” pitched by Senate President Pro Tempore Ralph G. Recto. Here, Recto proposed that existing investors, especially locators in economic zones, be allowed to keep their incentives, given the need to help businesses recover from the impact of the pandemic.
The AER also opposed an amendment to split Create into two, just so the first plank—reducing corporate income tax from 30 percent to 25 percent right after enactment—can be passed right away, since it is not as contentious as the rationalization of incentives.
Earlier, Sen. Juan Edgardo M. Angara said “coverage and length of incentives” are among the outstanding issues left unresolved after lengthy interpellations by senators just before going on scheduled break on October 17.
Drilon said this was why senators will hold a caucus on Tuesday to quickly consider compromise options on the incentives as the upcoming 2021 budget deliberations is likely to sidetrack CREATE and other bills on the table.
“There’s a caucus on Tuesday to see what is the possible compromise. This will likely be overtaken by budget deliberations. It [Create] will likely be tackled in December.”
The Senate Minority Leader affirmed that early approval of the national budget bill takes precedence due to the pandemic that requires fresh funding.
“We cannot afford to delay this budget,” said Drilon, adding: “All bills must be shelved momentarily for as long as the budget hangs.”
Source: https://businessmirror.com.ph/2020/10/19/budget-bill-sidetracks-complicated-create/