San Miguel gets House final OK for tax perks on airport project

MANILA, Philippines — A franchise bill granting tax breaks to San Miguel Corp. in building a new Manila airport hurdled the House of Representatives on Monday, with senators likely to pass the same controversial measure seen at risk of being copied by similar projects.

Voting 218-6 with two abstentions, the lower chamber approved on third and final reading House Bill 7507 giving San Miguel’s Aerocity Inc., a subsidiary handling the development of New Manila International Airport project, a 50-year license to construct, develop, operate and maintain a gateway in Bulakan, Bulacan, north of Manila.

But apart from the franchise, legislators, in approving the bill, also granted contentious tax incentives to San Miguel’s subsidiary that exempts the company from paying income, sales, excise and property levies that may be incurred while the airport is being built expected to last for 10 years.

The finance department, grappling with a decline in revenues due to the pandemic, opposed the measure. “We may have to air our concerns at the Senate since our worry is that, similar projects in the future might ask for the same incentives,” Finance Undersecretary Gil Beltran said in a phone interview.

But at this early, the finance agency appears unlikely to get some support from the Senate in opposing at least the tax perks for San Miguel after several senators, including Senate President Vicente Sotto III expressed support to the measure.

The finance agency’s concerns have some basis considering the Duterte administration’s “Build, Build, Build” infrastructure program, under which some airport projects like the Sangley International Airport project, led by Cavite local government, remain in the pipeline. 

More broadly, incentives have typically been opposed by government finance managers who see them as greatly eroding state revenues without clear and commensurate economic benefits. Last year alone, official estimates projected the government lost P540.8 billion to tax perks including income tax holidays and waiving of import levies. The problem gets more pronounced with the pandemic tarnishing with state balance sheet.

The country’s largest conglomerate is looking to build an airport that is seen to decongest the ageing Ninoy Aquino International Airport. With at least four runways, eight taxiways and three passenger terminal buildings, the new gateway, once built, will be connected by an 8.4-kilometer toll road to North Luzon Expressway to cut travel time to Makati to 30 minutes.
 
But to be able to build the airport, the project will have to reclaim more than 2,500 hectares of fishing and mangrove areas along the northern coast of Manila Bay, while also securing right-of-way from residents, including tribesmen, in the area.

San Miguel, in return, promised them new homes and livelihood while providing jobs to migrant workers displaced by the pandemic.

On the part of San Miguel, the Ramon Ang-led firm promised to employ some Filipino migrant workers displaced by the pandemic, while pledging to provide homes and livelihood to 700 families, including tribesmen, in Barangay Taliptip who will be displaced by the project. 

Still, Gabriela party-list Rep. Arlene Brosas said the project “threatens our country’s food security.” “Until now, the New Manila International Airport of San Miguel Corp. has not feasibility study and environmental compliance certificate, and now Congress wants to give them several tax exemptions,” Brosas said in explaining her negative vote to the bill.

“The planned tax breaks for San Miguel exceed the ordinary tax benefits given to ecozone locators for a project that will destroy livelihood and homes,” she added.

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Article and Photo originally posted by Phil Star Global last September 7, 2020 5:57am and written by Ian Nicolas Cigaral.

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