The Lower House is ready to pass the Senate version of the most urgent Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act that would save the country from further economic slump amid the pandemic.
House Ways and Means Committee chairman, Albay Rep. Joey Sarte Salceda, said if the Senate passes CREATE “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 Duterte during his latest State of the Nation Address (SONA). The House had already passed its version of the proposal much earlier.
In his recent social media post, Salceda said the measure’s prolonged discussions in the upper chamber “have extended the people’s agony,” but will not enhance it further, considering that multiple consultations were already done with various stakeholders on the proposal.
He said the House of Representatives 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 explained.
The economist-lawmaker said the proposal seeks to immediately lower the corporate income tax (CIT) from 30 percent to 25 percent, and provides a decrease of one percent every year from 2023 to 2027, down to 20% 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 noted.
Salceda stressed that the country needs 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% cut in CIT is a big deal,” he added.
The lawmaker said the cost has already reached around USD15 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 pointed out that “uncertainty is a ceiling to Philippine growth. Remove the uncertainty, and I guarantee you, market sentiment will change almost instantly,” he assured. 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 also added that the CREATE bill — formerly known as Corporate Income Tax and Incentives Rationalization Act or Citira — could contribute an additional 1.2 percent per year to the country’s GDP.