August 29th, 2024
Rep. Joey Sarte Salceda
The House contingent will seek to resolve differences in principle between the Senate and House versions of the CREATE MORE Act in a bicameral conference committee. We choose not to adopt the Senate version for several important reasons.
First, the Senate version did not adopt our effort to, once and for all, resolve the question of whether the cross-border doctrine remains the law of the land. Initially, the Senate aimed to do away with separate customs territories altogether, repealing them from the special ecozone laws that established them, and deleting the House’s definition of separate customs territories.
However, the Senate eventually just removed the repeal of such special laws, without adopting the House position of setting a primary and overarching doctrine on the question. If we adopt the Senate version as is, we’re back to the confusing status quo.
Second, the Senate version effectively allows tariff and VAT-free, but supposedly bonded, importation of petroleum for international carriers. We vehemently object to this. Such products will be fuel marked when imported – so the Senate proposal will confuse law enforcement as to the provenance of unmarked fuel.
In the past, the House has also determined, in various investigations, that the customs-bonded warehouse system enabled as much as P357 billion in revenue losses in 2010-2019, when the system was still allowed. We cannot agree to something we have already found in our own investigations to be a policy that creates and allows smuggling.
Third, over the course of the past few months, we have heard positions from the manufacturing sector that they need the RBE Local Tax proposal clarified. Specifically, they wish for current rates already set by LGUs to apply, in case they are lower than the proposed two percent rate in CREATE MORE. We see the merit in this, since the RBELT aims to streamline tax collection, not increase rates. Manufacturing tends to be sensitive to taxes based on gross receipts, because they have very low, single-digit margins.
They also hope that CREATE MORE will be very explicit in empowering LGUs to adjust those rates downward if they wish to, and that is a matter naturally reserved to LGUs under their fiscal autonomy.
We are also studying if there are other logical inconsistencies or ambiguities that we cannot leave to the IRR.
Usually, when we pass tax reforms, they tend to be towards December of the year. Hence, there is pressure to complete the reform before the new fiscal year starts. We still have a full month of session, not to mention, four months before this fiscal year ends. CREATE MORE is supposed to remedy ambiguities in CREATE. The cure will not be rushed.
I will closely work with Malacanang, as we have in the past. We always treat comments from the OSAPIEA with the highest consideration and priority. But, on these key issues, the House contingent will be steadfast.