The Networking Committee on Transportation and Logistics (NCTL) of the Export Development Council (EDC) has identified two major issues which it hopes to address through a legislative act.
First on the list is the further amendment of the National Internal Revenue Code (RA 8424 of 1997) which was modified recently by RA 10378 signed by President Aquino in early March to liberalize airline taxation.
RA 10378, otherwise known as the Common Carrier’s Tax (CCT) Act, exempts foreign carriers – both air and sea – from paying the 3% CCT and VAT (value-added tax) for the transport of passengers. What was modified in the process was Section 118 of RA 8424.
Meneleo Carlos, chairman of the EDC NCTL, noted that the original advocacy that EDC supported called for the tax exemption for both passengers and freight. This position was carried in the House version but was lost in the Senate counterpart bill.
“This amendment should be easier, since the passenger taxes that were scrapped already account for the bulk or about 90 percent of the revenues from these taxes,” Henry Basilio, committee vice chairman and director of a research foundation, explained.
If approved, this move will delete the entire Section 118 of RA 8424 as originally planned. At the same time, a repealing clause has to be added to remove Section 3 of RA 10378.
A second more “controversial” proposal involves separating the regulatory and development functions of the Philippine Ports Authority (PPA) and the Civil Aviation Authority of the Philippines (CAAP).
According to Carlos, this issue is complex, as there are several questions or sub-issues that need to be addressed for purposes of clarity and focus.
“If we take out the regulatory functions of PPA and CAAP and simply allow them to retain their operational/development function, there is a need to create a new agency that is purely a regulatory body,” Carlos explained. “Creating a new agency – say, Transport Regulatory Board – is difficult because of the budget it entails.”
A second sub-issue also poses a complicated scenario. “Will this new Board be limited to ports and airports or will it serve as one super body that covers all modes of transport (land, air, sea, light rail)?” he raised.
The regulatory function of such an agency covers many aspects – from registration to rate setting. One super body means putting all these under one roof.
“We think that this is a sure recipe for disaster and non-passage of this proposal. All agencies, to protect their turfs, will oppose the bill,” Carlos, a manufacturer- exporter, said.
Recently, both committee leaders saw some hope in finding the appropriate set-up by engaging the Governance Commission for Government-Owned or -Controlled Corporations (GOCCs), which is empowered by RA 10149 to reorganize, merge, streamline, abolish or privatize GOCCs such as the PPA.
In carrying out this mandate under this law, also called the Governance Act of 2011, the commission is guided by a number of standards, including the following:
- The functions or purposes for which the GOCC was created are no longer relevant to the State or no longer consistent with the national development policy of the State;
- The GOCC’s functions or purposes duplicate or unnecessarily overlap with functions, programs, activities or projects already provided by a government agency; and
- The GOCC is not producing the desired outcomes or no longer achieving the objectives and purposes for which it was originally designed and implemented, and/or not cost efficient and does not generate the level of social, physical and economic returns vis-à-vis the resource inputs.
The EDC NCTL is likewise working with relevant business organizations and the concerned government agencies to help come up with a doable solution.