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Committee Daily Bulletin CCoommmmiitttteeee DDaaiillyy BBuulllleettiinn Vol. III No. 28 A publication of the Committee Affairs Department September 22, 2015 COMMITTEE MEETING MEASURES COMMITTEE PRINCIPAL SUBJECT MATTER ACTION TAKEN/DISCUSSION NO. AUTHOR Ways and Substitute Rep. Mendoza Adopting Integrated Coastal Management The Committee, presided by its Vice Chair Means Bill to HB (R.D.) (ICM) as a national strategy to ensure the Rep. Raneo Abu (2nd District, Batangas), 2332 sustainable development of the coastal approved the tax provision of the Substitute Bill and marine environment and resources to HB 2332. and establishing supporting mechanisms for its implementation, and providing funds therefor Substitute Rep. Yu Strengthening the Balik-Scientist Program, The Committee approved the tax provision of Bill to HB appropriating funds therefor the Substitute Bill to HB 5388, as amended, 5388 subject to style. Juvy Danofrata, tax policy analyst of the Department of Finance (DOF), suggested that for the interest of transparency and accountability, Section 5 (Incentives) should explicitly state that the Balik-Scientist Program fund shall be utilized under the supervision of the Department of Science and Technology (DOST). She likewise suggested to delete the provision pertaining to the duty and tax-free importation of one unit second hand vehicle of the balik- scientist awardee as it is not aligned with the provisions of the Tariff and Customs Code of the Philippines. Rep. Victor Yu (1st District, Zamboanga del Sur) was amenable to the DOF’s suggestion of placing the Program’s fund under the account of the DOST. He, however, does not agree to the suggestion not to grant the balik-scientist a duty and tax-free importation of a second hand motor vehicle. Substitute Reps. Creating the Mindanao Power The Committee approved the tax provision of Bill to HBs Masongsong, Corporation, and providing funds therefor the substitute bill, as amended, subject to 676, 2621 & Lobregat & style. 4883 Rodriguez (R.) Rep. Edgardo Masongsong (Party-List, 1 CARE), author of HB 676, acceded to the suggestion of DOF Undersecretary Jeremias Paul Jr. to delete the provisions in Section 18 which exempt the Corporation from all taxes, duties, fees, imposts and other charges by government and governmental instrumentalities. Paul informed the Committee that Executive Order No. 93, which is still in effect, revoked all tax and duty exemptions enjoyed by government-owned and controlled corporations (GOCCs). For policy consistency, the DOF prefers that Mindanao Power Corporation be taxed like other GOCCs. Continuation… Substitute Rep. Escudero Creating the Filipino Academy of Arts, The Committee approved the tax provision of Ways and Bill to HB Letters and Philosophy, providing funds the Substitute Bill to HB 5029, as amended, Means 5029 therefor subject to style. Substitute Rep. Villanueva Converting the Tarlac College of The Committee approved the tax provision of Bill to HB Agriculture (TCA) in Camiling, Tarlac into the Substitute Bill to HB 5833, as amended, 5833 a state university to be known as the subject to style. Tarlac Agricultural University and appropriating funds therefor HB 344 Rep. Classifying the sale of electricity by The Committee will deliberate further on the Colmenares generation, transmission and distribution three bills in its next meeting. companies and electric cooperatives, and the services of franchise grantees of Rep. Neri Colmenares (Party-List, BAYAN electric utilities, and sale or importation of MUNA) averred that the country has the machinery and equipment directly used in highest electricity rate in Asia. This not only generation, transmission and distribution burdens the consumers who pay high of electricity as value-added tax exempt electricity rates, but also translates to high transactions, amending for the purpose production costs in businesses and thus Sections 108 (A) (ii) and 109 (1) of the impacts on the country’s economy. National Internal Revenue Code, as amended by Republic Act 9337 The DOF clarified that the grant of government subsidy is the reason why electricity rates in HB 2865 Rep. Nograles Including the sale of electricity by power other countries are lower than the Philippines’. generation companies in Mindanao in the Paul, however, explained that exempting the exemption from value-added tax, sale of electricity from value-added tax (VAT) amending for the purpose RA 8424, will translate to lower electricity rates for otherwise known as the Tax Reform Act of Filipinos. 1997, as amended Various power industry players present in the HB 5543 Rep. Exempting the system loss charge meeting, including the Philippine Independent Colmenares components in the sale of electricity by Power Producers Association, Inc. (PIPPA), distribution companies and electric Manila Electric Company (MERALCO), and the cooperatives from the coverage of the National Grid Corporation of the Philippines value-added tax, amending for the (NGCP) manifested their full support for the purpose Section 109 (1) of the National bills. Internal Revenue Code, as amended by RA 9337 and RA 10378 The DOF, on the other hand, asked for more time to study the bills, and promised to submit its position paper thereafter. PRE-PLENARY CONFERENCES ON THE FY 2016 BUDGET COMMITTEE SUBJECT MATTER DISCUSSIONS Appropriations Pre-plenary conferences on the proposed FY The Committee, chaired by Rep. Isidro Ungab (3rd District, Davao 2016 budget, and plans and programs of the City), conducted pre-plenary conferences with the Department of following government agencies: Environment and Natural Resources (DENR), Department of Finance (DOF), and the Governance Commission for Government-Owned and Controlled Corporations (GCG) relative to their proposed FY 2016 budget and plans and programs, focusing on issues and concerns raised by House Members. Department of Environment and Committee Vice Chair Rep. Ma. Victoria Sy-Alvarado (1st District, Natural Resources (DENR) Bulacan) presided over the pre-plenary conference on the 2016 proposed budget of the DENR of P22.84 billion. Rep. Fernando “Ka Pando” Hicap (Party-List, ANAKPAWIS) inquired on the status of the National Greening Program (NGP) of the DENR. In reply, DENR Undersecretary for Policy and Planning Manuel Gerochi said that since the inception of the NGP in 2011 up to September 15, 2015, the DENR has reversed the denudation of some 1.02 million hectares of forestlands. For the period of January to September 2015 alone, the Department has planted 186,497 hectares 2 Continuation… of lands with new trees. Appropriations The NGP is a reforestation initiative and a climate change mitigation strategy of the government which was established by virtue of Executive Order No. 26, issued on February 24, 2011 by President Aquino. It seeks to grow 1.5 billion trees in 1.5 million hectares of lands nationwide within a period of six years, from 2011 to 2016. Rep. Hicap requested the DENR to submit to the Committee a financial report on the NGP from 2011 to the present. On the query of Rep. Deogracias Ramos Jr. (2nd District, Sorsogon) as to why the DENR allowed the cutting of age-old trees in the Province of Sorsogon, Gerochi said it is meant to clear the area to give way to government road projects that would be implemented by the Department of Public Works and Highways (DPWH). Dinagat Islands Rep. Kaka Bag-ao inquired on the status of her request made since 2013 to cancel the Mineral Production Sharing Agreements (MPSA) issued by the Mines and Geosciences Bureau (MGB) to mining companies in her district. Rep. Bag-ao demanded that these mining permits should be cancelled or suspended immediately by the MGB, saying that such issuance is a violation of the Philippine Mining Act of 1995 (Republic Act 7942). MGB Director Leo Jasareno informed the Committee that the team sent to Dinagat Islands to conduct an investigation on the matter is already preparing a report. He promised to make the necessary recommendations as soon as the report on the investigation has been submitted. Department of Finance (DOF) Committee Vice Chair Rep. Gabriel Luis Quisumbing (6th District, Cebu) sat as the presiding officer during the pre-plenary conference on the 2016 proposed budget of the DOF and its attached agencies. DOF Undersecretary Jeremias Paul Jr. said that under the 2016 National Expenditure Program (NEP), the DOF stands to receive P18.87 billion which shall be distributed as follows: DOF-Proper, P2.59 billion; Bureau of Internal Revenue (BIR), P10.58 billion; Bureau of Customs (BOC), P2.77 billion; Bureau of Treasury (BTr), 1.67 billion; Securities and Exchange Commission (SEC), P645.45 million; Cooperative Development Authority (CDA), P329.47 million; Bureau of Local Government Finance (BLGF), P214.53 million; National Tax Research Center (NTRC), P47.04 million; Privatization Management Office (PMO), P42.55 million; Central Board of Assessment Appeals (CBAA), P7.27 million; and Insurance Commission (IC), P7,000. Paul disclosed that the government loses billions of pesos in foregone revenues due to the narrowing tax base in view of the many tax breaks and exemptions granted to companies or individuals. He added that the inefficiencies in tax collection by revenue agencies like the BIR also contribute to the government’s revenue losses. Moreover, Paul cited a World Bank Report which states that annual revenue losses due to smuggling may be equivalent to 1% to 2.8% of the country’s Gross Domestic Product (GDP) which translates to about P50 billion to P200 billion. Responding to the query of Rep. Al Francis Bichara (2nd District, Albay) on why some local government units (LGUs) are able to obtain new loans from banks despite having existing loans, Development Bank of the Philippines (DBP) President Gil Buenaventura said there are a number of requirements which an LGU must comply or submit to secure a loan. Among the requirements are a clearance from the Bangko Sentral ng Pilipinas (BSP), a resolution passed by the local 3 Continuation… Sanggunian supporting the loan application, an assurance from the Appropriations DOF of the LGU’s capacity to pay, and the sufficiency of the LGU’s internal revenue allotment (IRA) to cover loan payments.
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