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“Free from debt, free from death tax:” Salceda: Exemption from estate tax for agrarian reform beneficiaries ‘hidden gem’ of recently-signed New Agrarian Emancipation Act; Law to create “new generation of more productive farmers”

July 7th, 2023

House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) says that one of the most important components of the New Agrarian Emancipation Act, which President Marcos signed today, is the estate tax amnesty exemption for agrarian reform beneficiaries who transfer agrarian lands to their heirs, calling it “a forward-looking policy that encourages the rise of a new generation of farmers.”

“Good policy does not only seek to correct the mistakes of the past,” Salceda says, pointing to “the imposition of heavy debts and the tying up of agrarian land” as the main issue being corrected by the newly-enacted law.

“Great policy also looks to the future. It creates a better future. That is what this reform does, by including an estate tax exemption that will allow old farmers to transfer their land to a new generation,” Salceda said.

Salceda adds that “one of the reasons productivity from agrarian lands has stagnated is because they cannot be transferred to the younger generation of farmers, because of debts and the attached liens. And because of estate tax.”

Salceda estimates that the exemption, which Salceda inserted in the House as Chair of the House Committee on Ways and Means, forgives P35.4 billion in estate tax dues, “not to mention surcharges and penalties.”

Under the bill, ARB lands as estates shall be exempt from estate taxes but the exemption shall only apply to transfers from ARBs to their heirs.

The law also encourages local governments to grant real property tax exemptions or amnesties to agrarian reform lands.

Salceda also says that the transfer of lands “to the next generation of farmers is an opportunity to get agrarian reform right with proper support services. The most important of which, on a big-picture view, is irrigation and infrastructure. On the farm-level, it’s credit, marketing support, and cold storage.”

Salceda estimates that “CARP without adequate support services and with limited capital or entrepreneurship among farmer-beneficiaries is shown to have reduced agricultural productivity in CARP lands by as much as −34.1% compared to baseline.”

‘This has resulted in almost P418 billion in lost productivity for all CARP lands every year (for the 10.3 million hectares of CARP land),” Salceda writes.

Salceda estimates that “Condonation of ARB debts could result in increase in productivity of between 23.8% (as the market can now allocate the land more efficiently) and 38.3% if productivity-enhancing interventions are increased (which the law provides) among the lands condoned.”

“This landmark law emancipates agrarian reform beneficiaries from debt, and from estate taxes, which are basically death taxes. Free from debt. Free from death taxes.”

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