Laws Lying in Wait
In 2008, Congress enacted 19 laws of national scope. These included key economic reform measures identified by the Legislative-Executive Development Advisory Council (LEDAC), three of which still await full implementation.
RA 9504, signed on 17 June 2008, grants tax relief to minimum wage earners and higher income tax exemptions to individual taxpayers. Section 9 of the Act states that the law shall take effect 15 days following its publication in at least two newspapers of general circulation. On 25 September, the Bureau of Internal Revenue (BIR), through Revenue Regulation 10-2008, set its effective date to commence on 6 July 2008.
On 3 October, Senator Manuel Roxas, the principal author of the measure, petitioned the Supreme Court to nullify several provisions of the IRR. The petition seeks to compel the Finance Department (DOF) and the BIR to provide tax exemption for minimum wage earners on a full-year basis.
A similar law, RA 7167, which increased and granted additional tax exemptions for individual taxpayers, was passed in December 1991. Even though the law took effect on 30 January 1992, the Supreme Court ruled that the law should apply from the start of 1991.
For the DOF, implementing the tax exemption from 1 January 2008 would be an administrative nightmare. More so, it will further erode the revenue collection of the BIR if it refunds P5,000 each to some four million workers.
Meanwhile, RA 9505, or the Personal Equity and Retirement Account (PERA) Act signed on 22 August 2008, establishes a voluntary retirement account which will be invested in investment products such as trust funds, insurance and pre-need plans, and stocks, among others. The law aims to encourage workers, especially those not covered by the Social Security System (SSS) and Government Service Insurance System (SSS), and Overseas Filipino Workers (OFWs), to save for their retirement.
Under the law, a contributor may make an aggregate maximum contribution of P100,000 to his PERA annually, or P200,000 if the contributor is an OFW. A contributor is also allowed to maintain a maximum of five PERA accounts, provided that he shall designate only one administrator for all his accounts. The contributor is given an income tax credit equivalent to 5% of his total contribution, provided he does not withdraw the funds before reaching the age of 55.
Section 21 of the PERA law states that the act shall take effect 15 days following its publication in at least two newspapers of general publication. It also provides that the tax incentives granted under RA 9505 to take effect on 1 January 2009. However, the absence of guidelines delays the full implementation of the law.
The Bangko Sentral (BSP), along with other concerned regulatory agencies, are tasked to come up with the criteria for accrediting PERA administrators, custodians, and investment managers and approving PERA investment products. The BIR, on the other hand, shall cover the tax administration aspect of the measure. Consultations are being made, but the IRR has yet to be finalized and published. The BSP expressed its hopes that the IRR will finally be issued by the end of February.Also awaiting its IRR is RA 9510, or the Credit Information System Act, which was signed on 31 October 2008. It creates the Credit Information Corporation to function as the repository of standardized information on the credit history and financial condition of borrowers.
The law establishes a centralized system to receive and consolidate basic credit data to facilitate wider credit availment. The proposed system will make credit facilitation easier because lending institutions will be able to access accurate and reliable credit information. Consequently, it will also lower financing cost since the cost of gathering information will no longer be passed to the borrower since these will be readily available to lending institutions.
Section 8 of the law tasks the Securities and Exchange Commission (SEC) with formulating the IRR. The law also set its effectivity at 15 days after its publication in at least two newspapers of general circulation. However, like the other two laws signed, RA 9510 still has no final implementing guidelines published.
Beating the deadline
While some laws have already been enacted and waiting for their IRRs, a number of measures in the advanced stages of the legislative process need not be delayed further.
Congress has already ratified the P1.415-trillion General Appropriations Act of 2009. The enrolled copy will be prepared and presented to the President for signature. Since the Office of the President will have to check every entry, it may take some time before it is signed. And for any item the President finds objectionable, she has the power to veto.
Included in the budget is the P50-billion stimulus fund allocated after several realignments, including the P50-billion removed from debt servicing. Of this stimulus fund, P17 billion would be used for infrastructure projects, P10 billion for education, P1 billion for the environment, P2 billion for health and P3.15 billion for agriculture.
The fund, like those of other countries, is the Administration’s response to the economic crisis. However, some sectors are concerned whether the benefits will trickle down the line. Some sectors are also questioning the manner of sourcing out the fund, since National Economic Development Authority (NEDA) originally presented a P330-billion Economic Resiliency Plan. Implementation is another thing, since the President has yet to sign the bill and the country is technically working on a re-enacted budget.
Meanwhile, Congress also has to fast-track the bill defining the country’s territorial bounds. This became controversial following suggestions of alleged pressure from the government of China. The House approved HB 3216 on second reading as early as 12 December 2007. After more than a year, it remained pending on final approval, needing to pass the third and final reading.
The Philippines is a signatory to the United Nations Convention on the Laws of the Sea (UNCLOS) where parties to the agreement are expected to submit the limits of their territories based on recognized provisions. RA 3046 was enacted in 1961 and amended by RA 5446 in 1968 long before the effectivity of the UNCLOS on 4 November 1994, and the recognition of the archipelagic doctrine. The deadline set by the UN has already expired but this was extended to May 2009.
The proposed bill draws the country’s archipelagic baselines with the Kalayaan Group of Islands and the Scarborough Shoal included under the regime of islands, which are both defined under UNLCOS.
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