Through Kyle Aristophere T. Atienza, reporter
ANALYSTS largely welcomed incoming President Ferdinand R. Marcos Jr.’s veto of a law that would have created a special economic zone north of the Philippine capital, saying it sends a message that the public interest should trump corporate profits.
Mr. Marcos made the right decision in opposing this bill, which would ban companies in the proposed eco-zone, including San Miguel Corp.’s international airport project. worth P740 billion, said Terry L. Ridon, public investment analyst and chairman of think tank InfraWatch PH.
“These are unprecedented tax breaks being accorded to Bulacan Airport, specifically the indefinite exemption from income and property taxes as the franchise does not have a set deadline as to when the government can fifinally collect income and property taxes at the airport,” he said in a Facebook Messenger chat over the weekend.
The project has already received “massive tax breaks” through a statutory option, Mr Ridon said.
San Miguel President Ramon S. Ang did not immediately respond to a Viber message requesting comment.
Mr Marcos fully supports the Bulacan Airport City Special Economic Zone and Freeport, and his decision to veto the law should remedy its shortcomings, spokeswoman Rose Beatrix Cruz-Angeles said in a statement Sunday.
“The President’s veto is the fastest way to remedy the shortcomings of House Bill 7575, particularly the provision exempting the Examination Board from scrutiny fiFinancial transactions in the special economic zone and the free port,” she said.
“The construction of Bulacan International Airport and Aero City is notonwardsvetoed,” Ms. Angeles said, noting that the San Miguel Group has a separate franchise for it.
In his July 1 veto message to Congress, Mr. Marcos cited the need fiBe careful, especially in times when “resources are scarce and needs are great”.
Creation of a new special economic zone, whichonwardsers lengthy tax breaks for investors, would be a “significant fifinancial risk for the country,” he added.
His sister, Senator Maria Imelda Josefa Remedios R. Marcos, who supported the bill, said she doesn’t take the veto personally.
Mr Ridon said the government could lose up to 150 billion pesos in income taxes for a 40-year income tax exemption. “Without hardcap or specific Sunset rule, when the tax incentives end, the state will surely lose even more.”
In his veto message, Mr. Marcos said the bill would be “signifiprecipitously cut the country’s tax base. It is “not in line with the government’s goal of developing a broad-based, low-rate tax system.”
“The veto sets the stage for leveling the playing field for private investment in the public sector, as it suggests there should be no sacred cows in the treatment of large corporations dealing with government,” Mr Ridon said.
The veto showed that the public interest should always be at the heart of all government investments, he added.
Mr Marcos’ decision “also offers the government other alternatives in pursuing similar flagship projects that do not disadvantage the public”.
Mr Marcos said the proposed economic zone is close to the Special Economic Zone in Clark, Pampanga, which goes against state policy to create them in strategic locations.
Eligible companies outside of the Economic Zones can apply for tax incentives provided through a Singapore-inspired tax law signifislightly reduce corporate income tax, he added.
In one of his first decisions as president, Mr. Marcos sent a signal that “benefits should outweigh costs and benefits should outweigh risk,” said John Paolo R. Rivera, an economist at the Asian Institute of Management.
“He’s strategic. We can devote resources to value-adding economic activities,” he said in a Viber message. “It makes economic sense. It puts the focus on overall economic well-being.”
The bill contradicts existing laws as it lacks audit provisions, land expropriation procedures and a master plan, Mr Marcos said.
The measure gives the economic zone authority general powers to handle technical airport operations in violation of applicable aviation law.
Some analysts were skeptical of the veto, saying people should watch Mr Marcos’ future dealings with the business community.
Although the veto may have been “carefully considered,” it could “send a negative signal to investors,” said Antonio A. Ligon, law and economics professor at De La Salle University.
“This has been investigated by those who suggested it,” he said over the phone. “He needs to get the point across, especially to those who are optimistic about this free zone.”
Mr Ligon said the ball is now in Congress and that would preview how he will deal with Mr Marcos during his six-year tenure. “If lawmakers want to override the veto, they will address the objectionable features of the bill.”
He said it could also prompt lawmakers to reconsider the Special Economic Zones Act and consider changing provisions that offer sweeping tax breaks.
Arjan P. Aguirre, a professor of political science at Ateneo de Manila University, said the public should take a critical look at the points raised by Mr Marcos.
“We expect a new set of powerful stakeholders who will have a privileged place in setting the new government’s agenda,” he said in a Messenger chat.
The veto is a “curious case” because aonwardsect the interest of one of the most influential in the countrybottleThe most important and wealthiest citizens, said Robin Michael U. Garcia, a professor of political economy at the University of Asia and the Pacific.
“He vetoed it just a day after his inauguration,” he said, adding it was “a show of strength.”
“It’s really enlightening how he’s going to approach the economy,” Mr. Garcia said, noting that his father, the late dictator Ferdinand E. Marcos, had a “love-hate relationship” with the economy during his Two-Decade Rule.
Mr. Garcia recalled how the elder Mr. Marcos favored his own set of corporations and cronies “at the expense of the entire business community.”
The scientist said the public should be more concerned about the political implications of the decision than the economic costs.
San Miguel, one of the largest and most varied in the countryfied Companies, is investing P740 billion to transform a 2,500-acre property in the province of Bulacan into an aerocity with a world-class gateway capable of handling 100 million passengers annually.