An incentive package that is skewed to attract investors to locate in the poorer areas in the country would be the focused of the refinements of the old Fiscal Incentives Harmonization Bill that Senator Ralph Recto is going to refile in the Senate.
In a chance interview recently, Recto told reporters that a “location-oriented incentive package is needed to disperse growth into the countryside.”
“We want to favor investments that will be located in the poorer areas of the country. If a project will locate in Tawi-Tawi, Basilan it can get all the incentives it wants,” Recto said.
But, Recto would like to put a sunset clause on incentives noting that some incentives are being extended after they are supposed to lapse. This is meant to help rein in leakages in government revenues.
Some industries like telecommunications projects would no longer be granted incentives to put a stop to redundant fiscal perks.
“These kinds of investments are sure to come in even without incentives. Telco is an example of a redundant incentive. It was okay when they were just starting, but they are now earning P35 billion a year,” he said.
Recto also said he would file for an amendment to the Build-Operate-Transfer Law to attract more investments in public infrastructure like toll roads, seaports, airports, health care, education, with human development and wealth creation context.
“We have to tap private money,” he said.
Recto calls for the amendment of the Foreign Investments Act to ease some restrictions on certain industries. He, however, noted that some restrictions are in accordance with the Constitution.
The FIA contains the negative list, which specifies the sectors where full foreign ownership is restricted or banned at all.
On taxes, he said, “We have to decide whether we should go for a specific tax or ad valorem, but I am in favor of ad valorem because it is easier to implement and to enable us to capture the tax due based on value and not on the number of sticks in the case of cigarettes.”
He said he intends to file his proposed bills before July 26. Recto would like to head one Senate economic committee, probably energy, and one social committee either on education or health. –BERNIE CAHILES-MAGKILAT, Manila Bulletin
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