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Pia Cayetano: House wants economic Cha-Cha but dragging feet on CREATE bill

Senator Pia Cayetano questioned why the House of Representatives is so adamant to change the economic provisions in the charter yet it is slow in adopting a Senate bill also designed to attract more foreign investors. 

Cayetano argued during the Senate's first charter change hearing on Wednesday, January 27, that if the House’s end-goal was to bring in more foreign investors, then the first step would have been to finally adopt the Senate version of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) bill.

“If that is the objective, the first thing that could have been done was to pass CREATE. We have all the support – not just from the finance team, the economic team of the government, but also from the foreign chambers – that they now support the version of CREATE. So that would have been the first step,” Cayetano said. 

“So, it’s not for me to judge what the objectives of the House [were]. But if that was the objective, to improve the economic conditions [for our people], then this is what would have happened. And it could have happened right away,” she added. 

The CREATE bill, which senators approved in November 2020, aims to immediately trim corporate income taxes from 30% to 25% and would make tax incentives time-bound, performance-based, and targeted. 

It is designed to attract investors and help the Philippine economy recover from the coronavirus pandemic – the same rationale now being pushed by the House as it proposes to amend the economic provisions of the 1987 Constitution.

"I think most of our colleagues are quite happy with the more liberal and generous incentives that we’ve provided, which are competitive with our Asian neighbors. So that really would have been the easy step. So I cannot help but wonder, if that is the objective, then why could this [CREATE] first not be taken [up]?" Cayetano said.

The House had already passed its own version of the CREATE bill – which the chamber called the Corporate Income Tax and Incentive Rationalization Act – long before the Senate did, last September 2019. But there are conflicting provisions in the two versions. 

To settle these issues, Cayetano said House committee on ways and means chair Joey Salceda initially committed to just adopt the Senate’s CREATE bill.

But later on, Cayetano said she informally received from the House a 57-page matrix of the changes the lower chamber supposedly wants in the Senate version of the bill.

“So yesterday, they said they would be amenable to reducing it to like 3 items, because the Senate has pretty much taken a stand na sobra na ‘yan (that it's too much). I mean this is what’s going on. So I just want to share that,” Cayetano said. 

'More realistic' to pass bills instead

Cayetano is not alone in arguing that Congress would find it much easier to pass bills designed to attract foreign investors instead of taking the more divisive and lengthy Cha-Cha route. 

Senator Grace Poe argued during the same hearing that focusing on such stimulus and tax bills would be “more realistic.”

“So what I’m saying is, at this time, when a lot of concerns [have been raised] in the public and we already have bills in place that might help boost our economy, I think that it is a more realistic and less contentious goal to look at that route first before going through the entire exercise of constitutional amendment supposedly for economic provisions,” Poe said. 

Senate Minority Leader Franklin Drilon agreed, saying that lifting the constitutional restrictions on foreign investors is “not a golden bullet that would bring everything in.”

“Yes, there are strong arguments in favor of liberalizing our economy, the Constitution, but it can be achieved without touching, in the meantime, the Constitution,” Drilon said. 

“Because if we only talk about short-term investments, there is proof that we are doing this. I am of the view that amending the Constitution by adding the phrase ‘unless otherwise provided by law’ is not a golden bullet that would bring everything in,” he added. 

Other senators have earlier questioned the propriety of pursuing Cha-Cha in the middle of the COVID-19 crisis.

Still, Senators Ronald “Bato” dela Rosa, Francis Tolentino, and Sherwin Gatchalian – who authored resolutions pushing for economic Cha-Cha – still stood by their proposals.

Dela Rosa said relaxing requirements for foreign invesmtents would generate more jobs for pandemic-hit Filipinos, while Gatchalian said there is a need to unleash the economy’s “full potential [that is] being restricted by our Constitution.”

But Christian Monsod, one of the framers of the Constitution, warned that Cha-Cha would only be abused by legislators. – Rappler.com

Mara Cepeda

Mara Cepeda writes about politics and women’s rights for Rappler. She covers the House of Representatives and the Office of the Vice President. Got tips? Send her an email at mara.cepeda@rappler.com or shoot her a tweet @maracepeda.

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