First of three parts
Despite strong support from the Palace, and local and foreign business groups, several important measures are now being considered dead at the House of Representatives. These are Resolution of Both Houses 1 (RBH 1), or the economic Charter change (Chacha); Rationalization of Fiscal Incentives (RFI) bill, a bill lowering income and corporate tax rates; Freedom of Information (FOI) bill; Anti-Dynasty bill;
and Basic Law on the Bangsamoro Autonomous Region.
Speaker Feliciano Belmonte Jr. and other lawmakers admitted that the lower chamber is expected to face a quorum problem when session resumes on November 3, as members of the lower chamber are now busy for the upcoming 2016 national and local elections.
As author of the economic Cha-cha, Belmonte said he will leave to the next administration the passage of his proposal amending the economic provisions of the 1987 Constitution, or RBH 1.
Belmonte, who will seek reelection next year, said he is hoping that the next Congress would consider amending the economic provisions of the Constitution.
The House leadership did not push through with the expected voting on third and final reading of economic Cha-cha in June, apparently due to the lack of affirmative votes. The passage of economic Cha-cha requires the affirmative votes of at least two-thirds of the members of the House of Representatives.
The voting has also been affected by the Palace, particularly President Aquino’s stance against Cha-cha. Communications Secretary Herminio B. Coloma Jr. said he has yet to see a signal that the President had relented to the amendment of the economic provisions of the
1987 Constitution.
Moreover, according to Belmonte, the economic Cha-cha, which was backed by foreign and local business groups, is a larger contributor to economic growth as foreign direct investments (FDI) are seen to increase once ownership of estates and corporations—one of the issues raised by investors for not investing in the country—is relaxed.
“By amending the restrictive economic provisions of our Constitution, we empower Congress to enact laws that will attract the kind of investments that will reverse the
de-industrialization and de-agriculturalization of our economy,” Belmonte said.
“Only then can we encourage locators and investors to expand our manufacturing sector, the area where the better-paying decent jobs can be created. This is the best strategy to ensure that no Filipino will be left behind,” he said.
The resolution, filed by Belmonte and Sen. Ralph G. Recto, is eyeing to amend economic provisions on the 60-40 rule that limits foreign ownership of certain activities in the Philippines.
The resolution will include the phrase “unless provided by law” in the foreign-ownership provision of the Constitution, particularly land ownership, public utilities, natural resources, media and advertising industries.
Under Article 12 of the Constitution, foreign investors are prohibited from owning more than 40 percent of real properties and businesses, and are totally restricted from exploiting natural resources and own any company in the media industry.
Meanwhile, Belmonte also said the proposal amending the economic provisions of the 1987 Constitution should be passed by the House of Representatives.
“It’s really too late to make Cha-cha this year, but I’m still trying the idea of passing it just to show that people in the House [of Representatives] are for it. Passing it now will also give a great signal that [passing the economic Cha-cha] is possible,” he said.
“In other words, if we pass it here now, then for sure it will pass in the next administration, they also cannot say that we dillydally on it and say na walang support ’yan,” Speaker added.
Belmonte, however, admitted that it may no longer be feasible due to lack of time. Under the legislative calendar, Congress will adjourn from October 10 to November 2. The session will again resume from November 3 to December 18.
The third and last regular session of the 16th Congress is expected to be cut short because of the 2016 national and local elections in May next year.
Party-list Rep. Terry Ridon of Kabataan, however, said the leadership should be focused on the passage of other key legislative efforts than this economic Cha-cha.
“Instead of concentrating efforts on the passage of RBH 1, why not concentrate on
important bills? RBH 1 should not get top billing as the amendments it seeks are not only vague and overbroad, but will also open loopholes that destroy the standards and limitations set by the 1987 Constitution,” Ridon said.
“If the last remaining legal barriers to foreign exploitation will be lifted, a great number of Filipinos will become literal strangers to our own country—penniless mendicants in a nation whose lands and resources are mostly owned by foreign companies,” the lawmaker warned.
Status quo on fiscal incentives
Chairman of the House Committee on Ways and Means and Liberal Party Rep. Romero S. Quimbo of Marikina said the Rationalization of Fiscal Incentives (RFI) bill is also now considered dead in the lower chamber.
According to Quimbo, the possibility of enacting the RFI bill is already slim due to the failure of the departments of Finance (DOF) and Trade and Industry (DTI) to reconcile their conflicting positions on the measure.
The RFI bill is one of the priority measures of the Palace. The president, during his last State of the Nation Address in July, said he wants it passed before he steps down from office next year.
The RFI has been repeatedly filed since 9th Congress, but all had not reached approval.
“There’s no more time for rationalization of fiscal incentives considering the DTI and the DOF cannot reconcile their differences. This will involve close to 78 industries, so it’s very important that will be able to know their
specific inputs,” Quimbo added.
During the last hearing of the House Committee on Ways and Means on the RFI bill, Trade Undersecretary Adrian S. Cristobal Jr. identified four contentious issues.
- Implementation of a uniform incentive package for all economic zones, consisting of a four-year income-tax holiday (ITH), after which a choice of either a 5-percent reduced tax on gross income earned (GIE), or a 15-percent corporate-income tax (CIT) for 11 years (total of 15 years).
- Renewability of either the 5-percent GIE, or the 15-percent CIT for 15 years, upon review after 15 years. This incentive is on top of the ITH and GIE/CIT combination, totaling to 30 years of incentives availment. While the DTI is in favor of the time-bound perks, the authority to renew or terminate incentives should lie with the investment-promotion agency boards.
- Implementation of any change in the incentive package, either for export-oriented enterprises in the Philippine Economic Zone Authority (Peza) or the Board of Investments (BOI), should be prospective.
- Existing locators who enjoy the present package should be given an option to migrate to the new scheme.
Cristobal said keeping the incentive packages attractive is significant, now that other competing Asean member-nations are offering better packages.
Vietnam, for instance, offered Samsung a 30-year ITH for the electronics giant to locate there. Indonesia, according to Peza, just doubled its ITH period from 10 years to 20 years.
The DOF, however, remained firm in its opposition, specifically on the second issue.
Also, the RFI bill has been facing strong opposition from business groups due to its provisions, particularly the lifting of the tax- and duty-free incentives of several industries.
Quimbo earlier said the government is losing billions of pesos by giving incentives.
“We lose P148 billion in 2013 on fiscal incentives, but [with the passage of the RFI bill] we want to make sure that we will only remove incentives to those industries that don’t deserve it. However, those who deserve it, meaning those that generate jobs like manufacturing, as well as export-oriented, we will not only protect them but we will, in fact, even increase their incentives so that we can make it competitive,” the lawmaker said.
Quimbo, meanwhile, said that the lower chamber will monitor the implementation of the proposed Tax Incentive Management and Transparency Act (Timta), which was ratified by the both chambers of Congress.
The proposed Timta seeks to promote transparency and accountability in the grant and administration of tax incentives to business entities, and private individuals and corporations. To be continued