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Crafting crucial economic legislation

A long delay in the passage of the 2019 General Appropriations Act (GAA) caused the Philippines’ gross domestic product (GDP) to grow by only 5.9% last year. According to Finance Secretary Carlos Dominguez III, “if the 2019 budget was passed on time and the national government was able to replicate the 2018 growth in government consumption and construction, the economy would have grown by an additional 0.9 percentage point or 6.8%.”

The 105-day budget impasse happened during the last regular session of the 17th Congress, which was marred by infighting among members of the ruling coalition and a chaotic change in the speakership from Pantaleon Alvarez to Gloria Arroyo. There was also a feud between contingents from the Senate and the House of Representatives at the bicameral conference committee, further delaying the reconciliation of conflicting GAA provisions.

All those problems are now things of the past in the 18th Congress, which was able to pass the 2020 GAA before Christmas last year, and promises to finalize the 2021 national budget by the end of this month. Some quarters attribute this to the proactive young guns under the leadership of House Speaker Alan Peter Cayetano, who set the pace among his peers by working even on weekends and holidays.

Many congressmen in the current legislature belong to a younger generation that seems to be more productive with fresh perspectives on politics. The usual grandstanding by “trapos” or traditional politicians has been reduced in the virtual public hearings conducted via videoconferencing.

When a global health emergency was declared by the World Health Organization, Cayetano immediately formed the Defeat COVID-19 Committee to jumpstart the government’s pandemic response, including the social amelioration program under the “Bayanihan 1” law which was passed in record time during a special joint session of Congress last March.

After the eruption of Taal Volcano last January, the House leadership acted swiftly to develop a rehabilitation plan for affected communities in Cavite, Laguna, and Batangas. In both the Taal and COVID-19 disasters, their senatorial counterparts moved belatedly in terms of parallel efforts. For instance, the Senate only convened as a “committee of the whole” in May, when the upper chamber started marathon hearings on the public health and economic crises.

But the most apparent change can be observed in the partnership between the country’s economic team and the so-called “House of the People” when it comes to the tax reform agenda of the administration. All pending taxation measures have been passed by the lower house such as the Corporate Recovery and Tax Incentives for Enterprises Act or CREATE; the Passive Income and Financial Intermediaries Act or PIFITA; and the Real Property Valuation Act. In contrast, the Senate has not approved any of these proposed bills despite President Rodrigo Duterte’s appeal to Congress during his last 2019 and 2020 State of the Nation addresses.

CREATE has been endorsed by former Department of Finance (DOF) secretaries, major business organizations, and noted economists. Yet the senators have not voted on the measure, which the DOF said would provide the private sector its largest stimulus package to help businesses survive the economic fallout from the pandemic. Quite puzzling, too, why the Senate does not have a sense of urgency in passing this bill requiring no appropriation at all.

Noticeably in the consolidated version of the “Bayanihan 2” law, the bicameral body adopted a significant number of House-proposed provisions. Among them are the creation of a national online electronic application system accessible to every citizen in each local government unit for contact tracing purposes; 60-day grace period for the payment of loans; two-year exemption from compulsory notification for mergers and acquisitions with transaction values below P50 billion; removal of the initial public offering tax; and issuance of guidelines on the establishment of isolation and quarantine facilities by private enterprises.

More importantly, the country will no longer operate on another reenacted budget like in the first quarter of 2019 that not only stalled infrastructure projects and dampened GDP growth, but also set back the government’s poverty reduction program and failed to lift nearly half a million Filipinos out of poverty based on estimates from the National Economic and Development Authority.

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Source: Manila Bulletin (https://mb.com.ph/2020/08/31/crafting-crucial-economic-legislation/?utm_source=rss&utm_medium=rss&utm_campaign=crafting-crucial-economic-legislation)

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