Comprehensive

Vice President Leni Robredo delivered a rather strange “address” the other day where she warned against declining confidence in the present leadership. The event annoyed President Duterte who saw it as a stunt meant to undermine government efforts to address the public health crisis.

In her “address”, Robredo seemed to be describing the Bayanihan II for being too paltry. Had she waited another day, she might have been assuaged by the size of the 2021 budget submitted to the House of Representatives by the Budget Secretary.

The administration is asking Congress to pass a humongous P4.5-trillion spending plan. Consistent with the strategy of investing heavily in infra modernization to pump prime the economy, the proposed budget proposes a large outlay for public works.

Infrastructure investments have the highest multiplier effects. Every peso invested in new infra spurs P3.50 in domestic economic activity. A number of Build, Build, Build projects are now fully funded by our development partners. That will immediately deploy ODA as additional fuel to drive our recovery.

The hardworking Speaker of the House Alan Peter Cayetano promised to get the budget bill through the lower chamber within September. That will give the Senate ample time to do their work in passing the budget.

We have reason to be confident the 18th Congress led by Cayetano will deliver. The chamber has established a record of sorts for efficient and timely legislative work.

The House acted promptly on the tax reform proposals of the administration. The chamber months ago passed its version of the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE). This proposed law would actually be revenue negative for government as it brings down the tax rate for enterprises. With the tax reductions, our enterprises should be able to retain more of their earnings to expand their businesses – or at least keep them viable.

Lower corporate tax rates should likewise attract direct investments in our economy. One of the reasons we failed to attract investment flows is the inordinately high corporate tax rate. That rate hampers rather than helps our economy compete for scarce capital. It also undermined our small enterprises – those that create the most jobs.

CREATE will support our enterprises through the recovery phase. It will complement the infra modernization program intended to improve our logistics backbone, thereby improving efficiency.

Long after the House passed CREATE, the reform bill continues to languish in the Senate. The senators do not seem to understand the urgency of this bill as part of the comprehensive, multi-faceted strategy for economic recovery.

The CREATE bill, had the Senate acted more promptly, would have freed up P42 billion in tax savings for our enterprises. That would serve as a strong stimulus for our small, medium and large businesses now struggling with the effects of the pandemic.

All the country’s economists, former finance secretaries and business organizations voiced support for CREATE. They expected it to be passed last June. But the Senate failed to act on it.

After sessions resumed in July, Senate President declared the bill would be a priority. August is nearly ending and the Senate seems to be taking its sweet time.

When Taal Volcano erupted early this year, the House acted swiftly to determine how it might support government’s rehabilitation efforts. Cayetano put a team of legislators to work on a long-term rehabilitation plan for the provinces of Batangas, Laguna and Cavite.

Only after the House announced this initiative did the Senate echo the call for a long-term plan to be developed for the three provinces sitting under the shadow of a hyperactive volcano.

When the pandemic struck, the House quickly conducted hearings on the government response beginning March. The basic framework for what would become the Bayanihan to Heal as One Act was put together in record time. The Act enabled government to roll out the Social Amelioration Program and realign budget items to support our public health response.

The Senate only convened itself as a committee of the whole in May. After marathon sessions, the Bayanihan Act was passed.

The House quickly acted on the other tax reform measures that will help us build the fiscal strength to sustain the battle against the pandemic. Among these are the property valuation reform bill and the Passive Income and Financial Intermediaries Act (PIFITA).

In his last two SONAs, President Duterte pleaded with the Congress to pass these reform measures. Notwithstanding, the reform measures remain trapped in the Senate.

It is hard to explain how the House could process reform legislation so efficiently and the Senate could not.

It could be because Cayetano had assembled a team of young congressional leaders willing to work longer hours to get the priorities done. Or it could be that the senators are constantly distracted by other opportunities to grandstand.

At any rate, no senator has been heard defending the Bayanihan II measure from those who, like Robredo in her odd “address”, complain it is too measly. Those who make such a complaint seem to think of an economic stimulus package as a large barrel of money to be dispensed as dole outs. This is a severely restricted understanding of how a stimulus package should look like.

The most sustainable way to power our economic recovery will have to be a package of business-friendly policies to help our enterprises revive as well as a public spending plan focused on economic investments such as infra modernization. Only that combination will bring us closer to the path of growth.