Not an easy job

It’s been more than a year since the House of Representatives approved on third and final reading its version of the Corporate Income Tax and Incentives Reform Act (CITIRA). Unfortunately, the Senate has not acted on the counterpart bill with a similar sense of urgency.

As early as March this year, President Duterte already certified the CITIRA bill as urgent, citing the immediate enactment of Senate Bill 1357, which is still pending its second reading.  CITIRA is now known as the CREATE Act or Corporate Recovery and Tax Incentives for Enterprises.

CITIRA or CREATE is envisioned to rationalize and overhaul the existing investment incentives system and develop a regime that is performance-based, targeted, time bound and transparent. As the Package 2 of the comprehensive tax reform program, the bill also aims to amend the Tax Code by consolidating the various tax incentives embodied in over 300 laws into a single title under the National Internal Revenue Code.

The House version allows enterprises enjoying incentives under the current regime to continue availing of the incentives for up to five more years from enactment of the CITIRA or CREATE law. The Senate version, on the other hand, increases the period to seven years. There are other substantial differences between the two versions, so it is expected that a bicameral conference committee will be convened.

In its website, the Department of Finance said the economic team of the Duterte administration has proposed several amendments to Senate Committee Report 50 or the current ways and means committee report on CITIRA.

These include an immediate five percentage point cut in the corporate income tax (CIT) this year, which will be reduced further by one percentage point every year from 2023 to 2027; maintaining for up to nine years the status quo for registered business activities enjoying the five percent tax on gross income earned incentive, and giving the President more flexibility to grant a combination of fiscal and non-fiscal incentives, among others.

As proposed by the economic team, the CIT will be reduced outright to 25 percent until 2022, followed by a one percentage point reduction yearly until 2027 to reach 20 percent by that year. The DOF said the reduction would bring the country closer to the ASEAN CIT rate average of around 22 percent and would boost cost competitiveness in doing business. It stressed that the Philippines currently imposes the highest CIT rate in the ASEAN region, which is a burden to MSMEs that are dealing with the effects of the pandemic.

The finance department pointed out that for decades, the country has been too generous in granting tax incentives to a few investors, in perpetuity, and without a regular and in-depth review of the costs and benefits of doing so. In fact in 2017 alone, it noted that the Filipino people granted P441 billion or 2.8 percent of GDP in tax incentives to only 3,170 companies, including those on the elite list of top 1,000 corporations. CREATE, the DOF said, would make sure that every peso granted as a tax incentive yields a net positive benefit to society.

I honestly do not know why it is taking so long for the Senate to approve the CITIRA or CREATE bill when it took the Lower House just a few months to give it the green light. Given the huge membership of the House of Representatives, the absence of a strong leadership would have made approving any proposed measure a nightmare.

Fortunately, the current House leadership is able to deliver on its promises on time, and even earlier than promised. Inspite of everything they say about House Speaker Alan Peter Cayetano, he is able to address the varying interests of more than 200 legislators while ensuring that they toe the majority party line. The hardworking Cayetano has been able to earn the respect, trust and loyalty of his colleagues, allowing the body to work effectively in approving the President’s priority measures, including CITIRA/CREATE.

Cayetano’s vast experience as a legislator has helped him a lot. When he was just 22 and still in law school, he was already municipal councilor of Taguig. In 1998, he won a seat in the House as representative of the lone district of Taguig-Pateros. After completing three terms  in the House, Cayetano ran for senator in 2007 and won. He succeeded the late Sen. Joker Arroyo as chairman of the Blue Ribbon committee, where he exposed several corruption scandals. In 2013, on his second term, he was elected Senate Majority Floor Leader and chaired the Senate Committee on Rules. In 2016, he succeeded the late Miriam Defensor Santiago as chair of the Senate foreign relations committee.

Cayetano was Duterte’s running mate in the 2016 elections. He later held the position of Secretary of Foreign Affairs in the Duterte Cabinet.

As a legislator, among his achievements are the Anti-Money Laundering Act of 2001, The Overseas Absentee Voting Act of 2003, the Anti-Camcording Act of 2010, Expanded Senior Citizens Act of 2010, Strengthening of the Magna Carta for PWDs, and the Domestic Workers Act or the Kasambahay Law, among others. As Speaker, Cayetano led the House  last year in passing the 2020 national budget in record time. He also helped steer the passage of the President’s tax reform packages  and economic priority bills, as well as the Bayanihan 1 (Bayanihan to Heal As One Act)  and 2 (Bayanihan to Recover as One Act)  laws.

Capiz Rep.  Fredenil Castro made a valid point when he said in a recent privilege speech that one aspiring for the speakership cannot just sit idly by and twiddle his thumbs while waiting for the post to be handed to him. This was the mistake of Marinduque Rep. Lord Allan Velasco, who merely relied on his term-sharing agreement with Speaker Alan Peter Cayetano in his bid to become the next Speaker.

Under their term-sharing deal, Cayetano sits as the Speaker of the House for the first 15 months of the 18thCongress, with Velasco occupying the post for the remaining 21 months.

Between Cayetano and Velasco, the former obviously has the edge in terms of track record and experience.

Not so hidden agenda

Coastal clean-up day: Environment and Natural Resources Secretary Roy Cimatu (3rd from left) recently led the observance of International Coastal Clean-Up Day, marked by the temporary opening of White Sand Beach, a portion of the Manila Bay coastline near the United States Embassy. Shown with Cimatu are (from left) Manila Yacht Club Commodore Robert Lim Joseph Jr., Agriculture Secretary William Dar, Cavite Rep. Elipidio Barzaga Jr., Commission on Higher Education chair Prospero de Vera, Manila Mayor Isko Moreno, Social Welfare Secretary Rolando Bautista and Labor Secretary Silvestre Bello III.

For comments, e-mail at [email protected]