Solon warns of consequences in delaying CREATE bill approval

FILE: Makati Skyline (Photo By Patrickroque01 at English Wikipedia, CC BY-SA 4.0)

MANILA – Albay Rep. Joey Salceda on Wednesday warned of consequences if the passage of the comprehensive tax reform program (CTRP), particularly the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) bill, is further delayed.

Salceda, chairman of the House committee on ways and means, cited the assessment made by Fitch Solutions showing that the slow pace of tax reforms is “discouraging” foreign investors and contributing immensely to the decline in net inflows of foreign direct investments (FDIs). He said net inflows dropped 23.1 percent from a year earlier to USD7.647 billion.

The CREATE bill, which is the second package of the CTRP, has been approved on third reading at the House of Representatives. The measure is still at the period of interpellations at the Senate.

“When I said that the 2-year loss in FDI due to delays in passing Package 2 of tax reform was between USD6 to 12 billion, opponents of tax reform were skeptical. Well, now that crisis has come and the noise is being set aside in favor of more essential indicators in the economy, international observers and investment advisers are validating the substance of my claim,” Salceda said.

Salceda said that when it comes to economic decisiveness, “there is no bigger money than time”.

“The more time you lose over policy uncertainty, the greater your foregone growth is. Sayang yun, nakatulong sana ngayong Covid-19 (It could have helped during the Covid-19 [pandemic]),” he added.

He emphasized that the economic losses due to the delay in the bill’s passage are “immense”, noting that the proposed tax reform can make the country’s investment incentives one of the world’s best and most accountable.

“I will be very frank: even if you were a country with the ugliest investment code in the world, as long as you are legally open to FDIs and as long as your policy is set, someone will find your country to be suited to their specific needs,” he said.

He said under the CREATE bill, the country will have a low basic corporate income tax (CIT) rate of 20 percent, a standard menu of incentives, and a bonus menu of incentives for the best investors.

“So, the debate between this investor or that investor leaving is frustratingly superfluous. There are so many investors in the world that we are driving away because we could not make up our minds about getting this passed,” he said.

He said that while Congress could always modify incentives if CREATE proves to require tweaking, the three years wasted for potential investments due to its oppositors could never be brought back.

“It is said that time is money. I say, there is no bigger money than time because the potential of well-managed time is infinite. And the Filipino people’s time has been wasted,” he said.