EXPLANATION OF VOTE
Bicameral Conference Committee Report on the disagreeing provisions of HBN 4157 and SB 1357: Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act
Senate President Pro Tempore Ralph G. Recto
03 February 2021

Mr. President, my dear colleagues:

It has been said that the art of taxation is to pluck from the goose the largest possible amount of feathers with the smallest possible amount of hissing.

And like any tax measure, this was met with a lot of hissing, from companies who invested here on the promise of incentives and on the guarantee that these will be honored.

But the loudest hissing came from the government, who said that many of the geese have been keeping most of the feathers for themselves and have not been sharing their golden eggs.

So I commend the Senate President and the Chair of the Committee on Ways and Means for trying to reconcile divergent issues into a package where the gains outweigh the pains.

This happened because the Senate, true to its tradition of tempering instead of topping, vetting instead of validating executive proposals, found a way of crafting a balanced piece of legislation.

Yes, everybody gets a haircut, but everybody gets a hair grower too.

The latter is in the long list of tax deductions, beginning with lowering corporate income tax or CIT from 30%, the highest in ASEAN, to 25% for large corporations, and 20% for small and medium corporations.

There are more but I would not bore you with the huge impact of the fine print of the law. I will leave it to our hardworking chair to announce it to the public.

But let me say this: The Senate provisions Madame Chairperson shepherded and defended are more numerous than the equity contribution of the House.

Hopefully, this will be implemented soon, as CREATE can be a ventilator that will help companies in ICU, or prevent them from entering one.

I have also said that in helping out distressed firms, we should have a medicine cabinet approach that will contain a cocktail of cures, as there is not a single magic pill that will do the job.

But I am glad to note that we went over and beyond that. If such is an overreach, it is one driven by compassion.

I am referring to COVID fighting measures which have been incorporated in this bill.

These are the Senate prescriptions:

• VAT exemption for medicines for cancer, mental illness, tuberculosis and kidney diseases, beginning January 1, 2021 instead of 2023;
• VAT-free importation and sale of COVID-19 medicines, PPEs, and PPE components up to December 2023; and
• VAT-free importation of COVID-19 vaccines.

The House, on their part, batted for the duty-free importation of COVID-19 vaccines.

We have also set a higher tax-exemption threshold on the sale of real property.

We have also exempted from VAT the sale, importation, printing or publication of books, and any newspaper, magazine, journal, review bulletin, or any such educational reading material covered by the UNESCO agreement on the importation of educational, scientific and cultural materials, including digital or electronic format.

These are not sweeteners to coat a bitter pill. These are additives for a better pill.

My fervent prayer is that these should not be vetoed by the President. He will lose his credentials as our consoler-in-chief if he will thumb down our proposal to remove the tax on the medicines of people fighting for their lives.

Mr. President, my dear colleagues:

I vote yes.