A2 Thursday, March 15, 2018
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Effect on investments made Senate cautious on TRAIN 2 Continued from A1
ratings agency, also said the planned corporate-tax cut to 25 percent is not enough, because the Philippines’s neighbors are offering much lower rates. “Given the increase in foreign direct investments [FDI] recently, as well as the country garnering the title of best investment destination recently, we should tread carefully,” the senator suggested. Angara also assured that the Senate panel will “view the incentives review, not just from the standpoint of foregone revenue, but from the standpoint of jobs,
Best minds. . . Continued from A1
In the proposed provisions, the Con-com said “a political dynasty exists when a family— whose members are related up to the second degree of consanguinity or affinity, whether such relations are legitimate, illegitimate, half or full blood—maintains or is capable of maintaining political control by succession or by simultaneously running for or holding elective positions.” Under such definition, the Con-com adopted two more provisions. The first bars any second-degree relative of an incumbent official from running “for the same position in the immediately following election.” The second provision adopted prohibits second-degree relatives “from running simultaneously for more than one national and one regional or local position.” The ban on succession means that an
incomes, technology transfer and overall development.” Senate President Aquilino L. Pimentel III, however, is sought to play down apprehensions in the business community over the TRAIN 2 package. “TRAIN 2 is supposed to be revenue neutra l,” the Senate leader said, adding “its aim is to rationalize the tax system.” Sen. Sherwin T. Gatchalian, who chairs the Senate Committee on Economic Affairs, cautioned against the inclusion of provisions that will remove existing incentives meant to attract more investors to the country. While noting that the Phil-
ippines is known to have the highest corporate income-tax rate, “one positive aspect of TRAIN 2 is to be competitive.” “I would be cautious because [one reason] t hose investors came here was for the incentives offered,” the senator said, adding: “It would not be fair to remove incentives in the middle of their operations.” “It would not send a good signal,” he stressed. “We also need to consider promoting the country as a bright spot, but the ease of doing business has not improved, unlike our neighbors,” Gatchalian added, noting that the worsening traffic
condition also “affects the cost of doing business.” The senator advised concerned administration officials to go slow in tinkering with existing incentives meant to lure more investors. “We have to be cautious in removing incentives because some industries are not as competitive,” he said, “or else they won’t set up here anymore.” Current Philippine laws grant an attractive package of incentives, including income-tax holiday for a maximum of eight years, followed by a perpetual 5-percent tax on gross income earned, and zero value-added tax on local purchases and up to 30 percent of local sales,
among others. The new tax-reform proposal now calls for an overhaul and streamlining of these incentives, including a limit on Philippine Economic Zone Authority incentives to a maximum of 10 years and to increase the 5-percent tax on gross income earned to 15-percent tax on net income. “Despite the proposed corporate income-tax cut, we note that tax rates in the Philippines will still be one of the highest and least competitive in the region, and the repealing of tax incentives to investors will likely make it worse. This comes at a time when other countries in the region are
trying to offer more tax incentives in order to attract FDI,” BMI Research said. “Although the quid pro quo approach may be fiscally prudent, it creates more uncertainty for businesses. We believe that this could weigh on investment over the nearterm, as investors adopt a wait-andsee approach,” it added. The Philippines, after being a laggard in FDI, registered an alltime high FDI inflow in 2017, the Bangko Sentral ng Pilipinas (BSP) reported just this week. The BSP said FDI in 2017 hit a total of $10.05 billion for the whole year, 21.4 percent higher than the $8.28 billion seen in 2016.
incumbent official’s spouse, children and children-in-law, brother and sisters and brothers- and sisters-in-law, parents and parents-in-law, and grandparents-in-law may no longer run to fill the post to be vacated by their relatives. Under the prohibition on multiple positions, no two members of any dynasty as defined under the provisions may hold any two regional or local positions at the same time. The committee also added a provision that empowers the future Congress to provide additional prohibitions. Ali Pangalian Balindong, who belongs to a political dynasty in Lanao del Sur, voted in favor of the anti-dynasty provisions. “I come from a province that can claim to be the capital of political dynasties, and my family is no exemption. But after listening to the deliberations and to former Chief Justice [Reynato S.] Puno, I have decided to be part of history,” Balindong said.“I. therefore, support the banning of political dynasties in this country.”
Pimentel’s take
grateful” they were able to come up with something to address the “disturbing reality in Philippine politics.”
Gods’ ire
there are dynasties in 73 out of 81 provinces. Another study submitted to the committee revealed there are at least 295 political families who control power in various regions. Metro Manila had the most number at 31, while regions with the most number of dynasties apart from National Capital Region are Central Luzon with 21, Calabarzon (Cavite, Laguna, Batangas, Rizal, Quezon) with 20, Bicol region with 15, Western Visayas with 12, Mimaropa (Mindoro, Marinduque, Romblon, Palawan) with 11 and Central Visayas with 10. Another study by a unit of the Asian Institute of Management showed that 50 percent of positions for governor was contested by political dynasties. For the House of Representatives, 43 seats were won by a political dynasty over another dynasty, while 71 seats were won by a dynasty over a non-dynasty. The Con-com has also agreed in principle the president and vice president should be elected as a team.
CON-COM member and former Senate President Aquilino Q. Pimentel Jr. said it took the committee some time to come up with the definite proposed provisions. We needed to be “very careful with the wording” so that the regulation and its exemptions would be clearly understood by the people, according to Pimentel. He noted that the problem with the provision on anti-political dynasty under the 1987 Constitution was the way it was worded. “The ban against political dynasties was mainly dependent on action by Congress in making a law and, therefore, Congress, you know, [has] the leeway, to pass or not to pass the law and this is where we are at, facing the situation up to today so [after more than 30 years] on to the present constitution, nothing has happened,” Pimentel said. “So it’s better [to] spell it out without need of any congressional action.” He believes “the people would still be
Different scenarios
FOR Con-com member and lawyer Susan Ubalde-Ordinario, the committee had difficulty with the different scenarios that might arise once the provisions were implemented. Ordinario said they had “to take all things into consideration since this is a constitution for the people and for the next years to come.” “We are also cognitive of the fact [that] we cannot solve all the problems and we cannot also foresee that we are [addressing] the concerns because there are too many permutations possible,” she said. “But we hope with this, plus the forthcoming political reform agenda, political party system, the electoral reforms, all of these can contribute towards the real democratic field.”
IN his speech, Puno, the Con-com chairman, said he would rather put himself in harm’s way rather than to put the country’s democracy in harm’s way. “I do not give a nanosecond thought to the possibility that in voting to prohibit political dynasties, we shall be incurring the ire of the gods in our political firmament whose fortunes may be compromised,” Puno said. Puno also noted the enabling law to regulate political dynasties that will come from Congress “has been written in invisible ink.” He also reminded fellow Con-com members that in drafting the Constitution, “we cannot be blinded by any fear, even the fear of the omnipotents in our politics.” “With our vote today, they shall be omnipotent no more,” he said.
Political bases
ACCORDING to a study by University of the Philippines Professor Rolando G. Simbulan,