Senators seek economic stimulus package

MANILA, Philippines — Senators yesterday called for the immediate implementation of a multibillion-peso stimulus package to help the country survive serious threats to the economy, including the spread of the coronavirus disease 2019 (COVID-19).

The lawmakers made the call as the Senate committee on economic affairs, chaired by Sen. Imee Marcos, held a hearing on the economic impact and risk assessment on the spread of COVID-19, abrogation of the 1999 Visiting Forces Agreement (VFA) between the Philippines and the US, the African swine fever (ASF) outbreaks, Taal Volcano eruption and even the proposed Corporate Income Tax and Incentives Rationalization Act (CITIRA).

The CITIRA, under Senate Bill 1357, aims to reduce the corporate income tax (CIT) to 20 percent in 10 years while removing fiscal incentives given to certain industries.

During the hearing, representatives of various industries and some government officials testified that the effects of the spread of the disease as well as the termination of the military pact are beginning to be felt.

To help mitigate the negative impact, Sen. Nancy Binay and Marcos proposed that the passage of the CITIRA be postponed, while other measures to stimulate economic activity and spending be implemented.

“Maybe, the government can be a bit lenient in the various fees (paid by the public), like the travel tax, terminal fees and other fees asked by our frontline agencies. Even the excise tax on aviation fuel to boost domestic tourism… we just have to deal with why we have this triple whammy (COVID-19, VFA abrogation and CITIRA),” Marcos said.

She warned that ASF, which so far has yet to abate, would hit the agriculture sector that contributes around 10 percent of the country’s gross domestic product (GDP).

In the case of CITIRA, the government may press for the reduction of the CIT but suspend the removal of fiscal incentives that may lead to millions of job losses.

Senate President Vicente Sotto III, however, received a letter from President Duterte in the afternoon certifiying as urgent the CITIRA.

Duterte said the measure is necessary to “further institute tax reforms by rationalizing the corporate income tax and incentives system in order to promote foreign direct investment inflows and the expansion of business ventures conducive to economic growth and job generation.”

Officials of the National Economic and Development Authority (NEDA) told the committee that COVID-19 could lead to the reduction of tourist arrivals by 1.42 million people, or a loss of P187 billion.

Growth may go down by 0.5 percent to one percent and inflation spike by 0.1 to 0.2 percentage points on a monthly basis, while the deficit as a percentage to GDP may slightly increase, according to NEDA officials.

The NEDA said government financial institutions may also opt to agree to loan restructuring for small and medium enterprises when applicable, while pension funds may also choose to extend sickness benefits.

Cagayan Economic Zone Authority chief executive officer Raul Lambino told the committee that two major projects of foreign investors to the CEZA are not pushing through because of COVID-19.

Lambino said the $200-million wind power project of investors from Hong Kong has been postponed until the health emergency has stabilized. Chinese investors for a textile facility in CEZA also put on hold their project.