July 27, 2020 | 12:33 am
PRESIDENT Rodrigo R. Duterte is expected to unveil a “roadmap for recovery” in his fifth State of the Nation Address (SONA) on Monday, as the economy faces its deepest annual contraction in three decades amid the pandemic.
Mr. Duterte will address the country at a time when the number of coronavirus infections has breached the 80,000 mark, the unemployment rate hit an all-time high of 17.7% in April, and gross domestic product is expected to shrink by 2-3.4% this year.
Business leaders are hoping the President will give top priority to economic stimulus measures and legislation that will encourage the entry of more foreign direct investments to help the economy weather the crisis.
“The economy will need as much investment as possible for jobs going forward,” American Chamber of Commerce Senior Advisor John Forbes said in mobile messages last week.
“The country is facing one of the most serious crises in its history. We expect (President Rodrigo R. Duterte) will explain policies to balance the health of citizens and the health of the economy and even new reforms to achieve rapid economic recovery,” he added.
Business groups had earlier released wish lists, with fourteen groups asking for a reform package of 27 measures topped by amendments to the Public Service Act, Foreign Investment Act, and Retail Trade Act along with the CREATE bill. These measures could reduce entry barriers for foreign entrants into the retail sector and allow more foreign investment into telecoms.
European Chamber of Commerce of the Philippines President Nabil Francis in a mobile message on Friday said an attractive tax reform environment would “make the Philippines a globally competitive trade and investment destination.”
Separately, the British Chamber of Commerce of the Philippines (BCCP) is also pushing for tax reform, retail trade liberalization and changes to the public service act.
BCCP’s top priority is the P1.3-trillion economic stimulus or the Accelerated Recovery and Investments Stimulus for the Economy (ARISE) bill, for businesses to recover from losses caused by the strict lockdowns.
The chamber’s members, around half of which are small- and medium-sized enterprises, are concerned about addressing unemployment through government stimulus measures, BCCP Executive Director Chris Nelson said in a phone interview on Friday.
“The number one priority is the stimulus bill because the need to do things now, particularly our concern is unemployment and the fact that we need to give companies that — there will be an economic push,” he said.
TAX REFORM
The Finance department is renewing its push for the passage of the remaining packages of the comprehensive tax reform program (CTRP) before yearend, saying these are part of the economic recovery plan.
Finance Assistant Secretary Antonio Joselito G. Lambino II told BusinessWorld it is “crucial” for Congress to pass the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) bill as soon as possible. The measure, pending at the Senate, seeks to immediately lower the corporate income tax to 25% from the current 30%, and overhaul tax incentives.
The bill, which will undergo Senate plenary debates, is among the priority measures for the upcoming session, Senator Vicente C. Sotto III said on July 16. Other priority measures at the Senate include the proposed Bayanihan 2 and the ARISE bill.
House Ways and Means Committee and Albay Rep. Jose Ma. Clemente S. Salceda told BusinessWorld that he is now amenable to the CREATE version proposed by the Finance department, but will introduce changes if the Senate passes a “fiscally unsustainable” version.
“If there are no material changes, the House will concur with the Senate. We have already lost $12 billion in investments over the past two years because of the delay in passing this reform,” Mr. Salceda said in a phone message on Saturday.
Aside from CREATE, the Finance department is also hoping the CTRP Package 3 and 4, which involve real property valuation reform and proposed simplification of the tax structure for financial instruments, will be enacted by the end of the year
“Package 3 will improve our land valuation system to reduce problems, such as right-of-way issues. Package 4 will make our financial tax system fairer, especially for small savers, and reduce the cost of insurance products so that Filipino families can invest more in their future,” Mr. Lambino said in a Viber message on Friday.
There is an urgency to pass tax reforms during the second regular session of the 18th Congress, which opens on Monday. Finance Secretary Carlos G. Dominguez III had once said in a forum in August 2018 that “it is always difficult to reform tax policies on the eve of an election year.”
NEW REVENUE SOURCES
Meanwhile, the House Ways and Means Committee will focus on finding new sources of funds for the government’s COVID-19 measures, such as taxes on Philippine Offshore Gaming Operations and digital platforms.
“My committee has a set of tax proposals that could yield as much as P519 billion in 5 years… These are proposals that will primarily affect upper-income individuals, and will not erode economic growth,” Mr. Salceda told BusinessWorld in a phone message, Saturday.
Mr. Salceda, who chairs the Ways and Means Committee, said they are working on improving tax administration and enforcement, as well as possible rewards for informants of illicit tobacco trade.
RUNNING OUT OF TIME?
With two years left in his term, Mr. Duterte’s reform agenda may be derailed by the pandemic as he focuses on economic recovery.
“He has less than two years to push for legislation he promised. By his sixth and final SONA in 2021, legislators have only a few months to focus on legislative work and instead will likely start posturing and preparing for the 2022 elections,” University of the Philippines political science professor Maria Ela L. Atienza told BusinessWorld via e-mail on Sunday.
In a phone interview with BusinessWorld, University of Santo Tomas political science professor Marlon M. Villarin said the COVID-19 pandemic has forced Mr. Duterte to shift his priorities, making it unlikely the proposed Charter change will push through.
“When it comes to Charter change, it won’t happen in the next two years,” he said, adding the period for constitutional amendments won’t be feasible in the timeline between now and in 2022 since it would require public information drives and a plebiscite. — Beatrice M. Laforga, Jenina P. Ibañez, Charmaine A. Tadalan and Gillian M. Cortez
Source: https://www.bworldonline.com/reforms-urged-to-ensure-recovery/