Camarines Sur Representative LRay Villafuerte has welcomed the congressional ratification of the consolidated bill on the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE), which, he said, would help accelerate the recovery of the Philippine economy from the ravages of the Covid-19 pandemic.
A co-author of this long-due economic reform measure, Villafuerte pointed out that the imminent enactment of CREATE into law would “underpin economic recovery as it would benefit primarily the country’s MSMEs (micro, small and medium scale enterprises) that account for more than 99% of domestic businesses and employ about 70% of local workers.”
“CREATE promises to be the biggest economic stimulus for corporations in the country as the sizable cut in their CIT payments would enable MSMEs and other enterprises to use their would-be tax savings to sustain their operations and even expand their businesses and hire more workers.”
He said CREATE would provide financial relief to coronavirus-hit MSMEs because one of this bill’s main features is the reduction of the corporate income tax (CIT) by a third from 30%—which is the highest rate in the region—to 20% for enterprises with net taxable income of P5 million and below plus total assets of not more than P100 million.
“CREATE promises to be the biggest economic stimulus for corporations in the country as the sizable cut in their CIT payments would enable MSMEs and other enterprises to use their would-be tax savings to sustain their operations and even expand their businesses and hire more workers,” Villafuerte said.
Villafuerte issued this statement following this week’s ratification of the bicameral conference (bicam) committee report on the consolidated version of the CREATE bill.
The Camarines Sur legislator, who had likewise co-authored the Bayanihan 1 and Bayanihan 2 laws, earlier supported the call by economic managers led by Finance Secretary Carlos Dominguez III for the Congress to focus on “doable” legislation to attract more foreign direct investments (FDIs) and hasten economic recovery.
For Villafuerte, lawmakers should give their top attention to the passage of these economic reform and stimulus bills in lieu of pushing another Charter Change (Cha-Cha) initiative at this time, as Cha-Cha would only sidetrack national efforts to overcome the coronavirus pandemic and save sectors in distress.
While he has long been a Cha-Cha advocate, Villafuerte said “now is the wrong time to pursue this politically sensitive and potentially divisive issue as it would only deflect national attention from the principal concerns of Covid-19 response and economic recovery.”
“After CREATE, the other economic reform bills endorsed by Dominguez and Lopez should be our doables this year in lieu of Cha-Cha.”
Villafuerte said the nation’s focus should remain on Covid-19 response, particularly keeping the mass vaccination program on track, and on speeding up recovery and regaining the economy’s pre-Covid growth momentum.
“This (economic recovery) has acquired greater importance,” he said, “amid the bleak forecasts by multilateral and international institutions that it will be a slow rebound for the Philippines as a result of the economic scarring from last year’s stringent lockdowns and the relatively smaller amount that the government has spent on reviving the economy when compared to those allocated by many of our Asian peers.”
Villafuerte said that after CREATE, the other economic reform bills endorsed by Dominguez and Lopez “should be our doables this year in lieu of Cha-Cha. These pending economic bills meant to stimulate the economy and ease restrictions on foreign participation in local businesses would, once passed and enacted into law, usher in immediate reform that would help hasten economic recovery and finally transform the Philippines into a magnet for FDIs in the region.”