The House of Representatives is ready to pass the Senate version of the Corporate Recovery and Tax Incentives for Enterprises Act that aimed at saving the country from further economic slump amid the pandemic.
House Ways and Means Committee chairman and Albay Rep. Joey Sarte Salceda said if the Senate would pass the CREATE bill, “as currently proposed next week, we are ready to adopt the version, so the whole thing could finally be resolved.”
The CREATE bill is among the priority measures endorsed and certified by President Rodrigo Duterte during his latest State of the Nation Address. The House already passed its version of the proposal.
Salceda said in a social media post that the measure’s prolonged discussions in the upper chamber “have extended the people’s agony,” but would not enhance it further, considering that multiple consultations were already done with various stakeholders on the proposal.
He said the House is ready to adopt the Senate version as soon as it is passed next week, adding that each day that passed without deciding on the proposal is hurting the economy, as opportunities on investments, job creation and revenues slip by.
“CREATE is the result of our conversations with the Executive. These recommendations were validated by multiple engagements with stakeholders, especially representatives of small businesses and large employers,” Salceda said.
The economist-lawmaker said the proposal seeks to immediately reduce the corporate income tax from 30 percent to 25 percent and provides a decrease of one percent every year from 2023 to 2027, down to 20 percent eventually. The measure will also provide the executive with power to grant flexible “bonus” incentives to entice “elephant-sized investments,” said Salceda, who principally authored the bill.
“Under CREATE, we can mix and match incentives to the specific needs of these elephant-sized investments. During its House deliberations, the industry representatives always lamented how we missed attracting investments from big companies, such as Samsung, he said.
Salceda said the country needed big structural reforms to boost overall investor confidence, noting that CREATE will be the necessary “first step,” to these reforms. “By passing CREATE, we will immediately signal to the private sector that we trust in future Philippine growth, and that we are giving them the tools to get us out of the ditch. That will be a quick boost to the animal spirits of the market. An immediate 5-percent cut in CIT is a big deal,” he said.
The lawmaker said the cost has already reached around $15 billion in foregone foreign investments because of the two years of delay in passing the economic reform. He lamented that “every day that we fail to decide on this issue, we hurt the economy, and we forego jobs, revenue, and investments, and prolonged the agony the pandemic inflicts on the economy.
He said that “uncertainty is a ceiling to Philippine growth. Remove the uncertainty, and I guarantee you, market sentiment will change almost instantly.”
CREATE is seen to produce at least 1.1 million jobs in five years and trigger a V-shaped recovery for the country’s economy by next year.
Salceda, who is also the co-chair of the Defeat COVID-19 Committee Stimulus Package, said the number of jobs to be created by the passage of the CREATE bill would be equivalent to half of the lower end of his estimates that 2.2 million to 4.4 million people would be unemployed this year amid the Covid-19 pandemic.
“I think a good strategic objective would be to recover at least 50 percent of that in 2020. That would go for something like 1.1 to 2.2 million jobs,” said Salceda in an earlier interview.
He said the CREATE bill—formerly known as Corporate Income Tax and Incentives Rationalization Act—could contribute an additional 1.2 percent per year to the country’s GDP.
