By Kyle Aristophere T. Atienza and Beatrice M. Laforga, Reporters
THE LAST TWO packages under the comprehensive tax reform program, as well as a bill equipping state-run banks to lend more to distressed businesses are still priority measures, officials said, even if President Rodrigo R. Duterte did not mention these during his last State of the Nation Address (SONA).
In a Viber message on Wednesday, Finance Assistant Secretary Maria Teresa S. Habitan said they would seek an urgent certification on the proposed Passive Income and Financial Intermediary Taxation Act (PIFITA) and the Real Property Valuation and Assessment Reform Act “as soon as they are approved on second reading at the Senate.”
“We are optimistic that the remaining tax bills will be passed, especially property valuation reform and PIFITA. Both bills are already done in the House of Representatives, and they are also in the Senate agenda,” she said.
The two bills are part of the common legislative agenda of Legislative-Executive Development Advisory Council (LEDAC) that are targeted to be passed by yearend.
Both are still pending at the Senate committee level.
The Real Property Valuation and Assessment Reform bill, which is the third package under the tax reform program, aims to establish a single and improved valuation system in assessing properties. The measure will broaden the tax base used for property-related taxes and boost collections, without increasing the rates or slapping new taxes.
The House passed its version on third reading in November 2019.
Meanwhile, the PIFITA bill aims to simplify the tax structure for financial instruments. It was approved by the House in September 2019.
In his final SONA on Monday, Mr. Duterte did not mention the remaining tax reform packages, but cited the need to revisit and update tax laws regularly amid the changing environment.
“Tax laws are not always perfect and that is why every now and then, they have to be revisited to see if they are at pace with the changing times. Let us therefore continue to monitor the relevance and impact of our tax laws on individuals and private institutions to prevent serious damage on their financial health,” Mr. Duterte said on Monday.
GUIDE BILL
Meanwhile, the proposed Government Financial Institutions Unified Initiatives to Distressed Enterprises for Economic Recovery (GUIDE) Act is also still part of Mr. Duterte’s priority legislation because it was “classified as an administration priority bill by the LEDAC,” Palace Spokesperson Herminio L. Roque, Jr. told BusinessWorld in a Viber message.
The bill was already approved by the House of Representatives on third and final reading in February. It is still pending at a Senate committee.
The proposed GUIDE bill gives state lenders Land Bank of the Philippines (LANDBANK) and Development Bank of the Philippines (DBP) more funds to expand their loan programs for micro, small and medium enterprises (MSMEs) heavily affected by the pandemic.
Under the measure, LANDBANK and DBP would be given P7.5 billion and P2.5 billion, respectively, to boost their unified initiatives.
The proposed law creates a state-backed holding firm, which shall be known as Accelerate Recovery to Intensify Solidarity and Equity or ARISE, Inc., allowing both state lenders to enter into joint venture deals with distressed businesses.
Several congressmen who voted against the House bill had opposed to the creation of the special holding company, which will enjoy fee privileges and exemptions from procurement and competition laws as well as tax obligations.
Asked whether Mr. Duterte backs these highly contested provisions, Mr. Roque said: “He does.”
“GUIDE is still under review pending a response from the inter-agency on GUIDE on the several issues we raised,” Senator Grace Poe-Llamanzares said in a Viber message.
In a statement on Monday, Senate President Vicente C. Sotto III named the GUIDE bill, as well as the last two remaining tax reform packages, as priorities for the last regular session.
The National Government missed its first-half spending target by 9.56%, which the Bureau of the Treasury (BTr) partly attributed to the pending enactment of the GUIDE bill.
“The GUIDE bill was supposed to be funded with P10 billion from realigned Bayanihan II funds,” House Ways and Means Chair Jose Maria Clemente S. Salceda said in a Viber message. “Since we did not extend Bayanihan II, if ever we pass GUIDE, we have to draw out of a supplemental appropriation, or realign something from the 2021 budget.”
Mr. Salceda suggested that government financial institutions (GFIs) propose “similar rescue vehicle or investment holding system as far as allowed by their respective charters and have the budgetary requirements proposed in the General Appropriations Act.”
“Whatever spending we infused into the GFIs is not money gone forever. This is an investment, and we expect returns to both the state and the taxpayer,” the Albay solon said.
“While anything towards GUIDE might be counted against short-term deficit spending and on the government’s short-term cash position, in the grand scheme of things, this is not a minus on our fiscal position unless we lose all of it, which is very unlikely,” he added.