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Proposed Senate Bill 2021-4

Nurturing Entrepreneurship With Incentives Act/NEW Incentives Act)

Explanatory notes:

Micro, Small, and Medium Enterprises (MSMEs) employ a bulk of workers (62.4%) in the Philippines and thus serve as the lifeblood of the country’s economy. Unfortunately, few incentives are given to nurture MSMEs, especially those that are yet to be formed and newly established ones. Meanwhile, big business enterprises were historically pampered by incentives ranging from tax holidays to preferential tax rates. This proposed Senate bill will thus provide incentives for the formation of more MSMEs and ensure that existing ones are able to grow and help workers and citizens, while helping lift the country’s economy too. This proposed legislation will also help the country’s entrepreneurial laws be attuned to 21st century realities such as e-commerce and e-business. Such consideration is driven by the fact that the country’s business registration processes are notoriously cumbersome and expensive. For example, sole proprietorships – even start ups – are required to have a physical business address for initial Department of Trade and Industry (DTI) registration and succeeding registrations and/or accreditations in other local and national agencies. Some business enterprises in the Philippines have started virtual office arrangements to help solve such problem, but these are still expensive (for example, VOffice’s cheapest offer is at 2,248 pesos per month).

Be it enacted by the Senate and the House of Representatives of the Philippines assembled. 

SECTION 1. Short Title. This act shall be known and cited by its short title “Nurturing Entrepreneurship With Incentives Act (NEW Incentives Act).”

SECTION 2. Declaration of State Policy. Promotion of entrepreneurship as a state policy enshrined in ARTICLE XII, Section 14 of the 1987 Constitution is hereby reiterated and implemented: “The sustained development of a reservoir of national talents consisting of Filipino scientists, entrepreneurs, professionals, managers, high-level technical manpower and skilled workers and craftsmen in all fields shall be promoted by the State…”

SECTION 3. Coverage. This Act shall cover all Micro, Small, and Medium Enterprises (MSMEs) registered as or to be registered as sole proprietorships, whose total assets including those arising from loans, shall not be more than Three Million Pesos (P3,000,000.00).

SECTION 4. Flexibility of Physical Business Address Requirements. This Act hereby allows the use of a functioning website with complete details on business name and business activities/services offered, in all government registration forms, accreditation forms and the like – local and national – in lieu of physical business address for eligible entities where the feasibility of e-business/e-commerce is demonstrable, such as but not limited to: online selling, electronic or digital publishing, consultancy services, video production &/or editing services, editorial services, and other similar services or business activities. The complete list of eligible entities for this section will be threshed out in the implementing rules and regulations (IRR). Such list shall be updated yearly. For non-eligible entities, the entrepreneur shall be allowed to use his/her home address as his/her physical business address, if he/she is unable to rent or acquire an office for his/her business.

SECTION 5. Tax Exemption. All proceeds from the products and/or services offered by covered entities are hereby exempted from income tax for the first five years of business operations, provided that net profits for the applicable year doesn’t exceed One Million Pesos (P1,000,000.00), except for Barangay Micro Business Enterprises (BMBEs) which will continue to enjoy tax-free status unless if their registration status is upgraded into levels above the barangay. Meanwhile, all covered entities are permanently exempted from the percentage tax, unless their non-VAT registration or VAT-exempt status is changed.

SECTION 6. Registration and/or Accreditation Fees. The registration and/or accreditation fee (and consequently, fees for renewal of registration and/or accreditation) for every covered entity is capped at 100 pesos per government agency – local or national – for the entity’s first five years of operation, after which it is capped at 500 pesos per agency, except for BMBEs which will continue to enjoy the initial rate, until its registration status is upgraded.

SECTION 7. Exemption from Requirements Related to Physical Business Address. All eligible entities that use a website in lieu of a physical address, are exempted from business registration and/or accreditation requirements that require physical inspection of a physical business address.

SECTION. 8. Fully Online Business Registration and Renewal Processes. Within 1 year from this Act’s effectivity, the DTI and the Bureau of Internal Revenue (BIR), through the help of the Department of Information and Communications Technology (DICT) ensure that the country’s national and local electronic Business One-Stop Shop (or eBOSS) systems are fully integrated into one system with fully functioning online business registration and renewal platform which will make it possible for covered entities to be registered and eligible to legally operate within 2 business days after filling out the required online forms.

SECTION 9. Interest-Free Loans. All government-owned banks are hereby required to provide interest-free loans amounting to a maximum of One Million Pesos (P1,000,000) per covered entity, with the total amount of loans per bank capped at One Billion Pesos (P1,000,000,000) per year. Every covered entity can apply only for one such loan for every 5 years, and every entrepreneur can apply only for a maximum of two such loans for every 5 years. Such loans will also be exempted from any service fees, and will only be subject to minimal documentary requirements including the DTI and BIR certificate of registration, and a business proposal that outlines how the money will be spent for the enterprise. Every loan is payable a year after it was granted, in at most 60 monthly installments. No interest will be charged on any late payment, but non-payment of the loan balance within 7 years after it was granted will disqualify the recipient from acquiring any loan from government banks, until the balance is settled. Furthermore, the business registration of the enterprise for which the loan was made will be cancelled and no new business registration application will be processed in the entrepreneur’s name, until he/she has settled the loan balance.

SECTION 10. Seed Capital. Subject to the guidelines in the IRR, the DTI will issue an annual competitive call for applications for seed capital amounting to Two Hundred Thousand Pesos (P200,000) per successful covered entity’s application. The total amount of seed capital to be released annually is capped at One Billion Pesos (P1,000,000,000). This seed capital application will be on top of the available interest-free loans in the preceding section. Every entrepreneur can file only one application for seed capital for every year, and one for every business registered under his/her name throughout its existence.

SECTION 11. Free Trainings and Business Mentoring. The DTI, BIR, and other pertinent agencies are hereby required to provide free trainings and business mentoring for covered entrepreneurs, subject to the provisions in this Act’s IRR.

SECTION 12. Incentives for Professionals’ Services to MSMEs. Filipino professionals who would render their relevant services (e.g. business mentoring, bookkeeping and/or accounting, expert consultancy and the like) to MSMEs covered by this Act, for free, will be able to use such service as proof of completion of Continuing Professional Development (CPD) requirements for their respective professions, in which one year of free service to the MSMEs is equivalent to full compliance with the CPD requirements for one professional license renewal cycle. The guidelines for this section will be threshed out in this Act’s IRR.

SECTION 13. Funding. Sections of this Act which require new funding will be funded through general appropriations.

SECTION 14. Implementing Rules and Regulations. The DTI, BIR, in coordination with pertinent agencies, representatives of government-owned banks, and representatives of entrepreneurial groups, will draft and release the implementing rules and regulations of this Act, not later than 3 months from its effectivity.

SECTION 15. Separability Clause. In case any provision in this Act shall be declared invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired.

SECTION 16. Repealing Clause.  All laws, decrees, executive orders, proclamations, rules and regulations, and other issuances, or parts thereof which are inconsistent with the provisions of this Act, are hereby repealed or modified accordingly.

SECTION 17. Effectivity Clause. This Act shall take effect upon its publication in at least two (2) national newspapers of general circulation.

APPROVED.

References:

https://www.dti.gov.ph/resources/msme-statistics/

https://voffice.com.ph/virtual-office-manila/Virtual-Office-Manila#theplans

https://bnrs.dti.gov.ph/registration/create

https://pcw.gov.ph/republic-act-9178-barangay-micro-business-enterprises-act-of-2002/

Proposed Senate Bill 2021-3

People’s Initiative Revitalization & Mobilization Act/PIRMA

Explanatory note:

In 1989, as a way to institutionalize People Power though empowering grassroots’ legislative initiatives, Republic Act (R.A.) No. 6735 was enacted. It was aimed at implementing constitutional provisions related to “the power of the people to propose amendments to the Constitution or to propose and enact legislations.” Despite its noble intentions, the said Act provides for a cumbersome process which defeats its stated purposes. In fact, no single legislative piece or constitutional amendment was passed through this process. In two separate decisions, the Philippine Supreme Court has also declared that R.A. No. 6735 is “‘incomplete, inadequate or wanting in essential terms and conditions’ to cover the system of initiative to amend the Constitution” (firstly in G.R. No. 127325 and reiterated in G.R. No. 174153).

Furthermore, R.A. No. 6735’s provisions are no longer attuned to the needs and interests of the 21st century’s information technology-powered citizenry. Hence, there is a need to update and to expand this Act, and ensure that it would stimulate and revitalize, rather than hamper, people’s legislative initiatives. This proposed Senate bill is the most creative and innovative implementation of people’s rights as initiators of legislations so far (for the record and to their credit, former Senators Loi Ejercito Estrada, Edgardo Angara, and Miriam Defensor Santiago have filed Senate bills which aim to strengthen people’s initiatives too, but their bills were still predicated on 20th century manual processes, while the current Senate bill intends to modernize the processes for people’s initiatives, especially that there is no known and/or dynamic champion of people’s initiative in the current Senate). This proposed Senate bill is partly inspired by the United Kingdom’s online parliamentary petitions system, in which the UK government is required to respond for every petition that garners at least 10,000 signatures, and the UK Parliament is required to consider for debate every petition that garners at least 100,000 signatures. It’s about time we adopt a similar system for the Philippines.

Be it enacted by the Senate and the House of Representatives of the Philippines assembled. 

SECTION 1. Short Title. This act shall be known and cited by its short title “People’s Initiative Revitalization Act (PIRMA).”

SECTION 2. Declaration of State Policy. The power of the people to directly propose, enact, approve or reject, in whole or in part, the Constitution, laws, ordinances, or resolutions passed by any legislative body upon compliance with the requirements of this Act is hereby affirmed, recognized and guaranteed.

SECTION 3. Coverage. This Act shall cover the Constitution, laws, ordinances, or resolutions passed by any legislative body.

SECTION 4. National Online People’s Petitions Database. This Act hereby directs the Department of Information and Communications Technology (DICT) to establish a National Online People’s Petitions Database, akin to the UK’s Parliament Petition Database, within a year from this Act’s effectivity. The said database shall be a secure and user-friendly online platform for any Filipino citizen to: propose a specific amendment in the Constitution; propose a legislative bill for congressional and Senate action; compel Congress and Senate to immediately pass a pending House and/or Senate bill; compel Congress and Senate to immediately repeal a law; or to compel the president to repeal an executive order. For automatic verification purposes – especially for petitions related to proposed constitutional amendments – such system should require every citizen who want to initiate and/or sign a petition to utilize his/her National ID in the sign up process for the national petitions database. Within two years from this Act’s effectivity, the DICT should ensure that the said database is also capable of handling petitions related to local ordinances and resolutions.

SECTION 5. Required Responses for Congress, Senate, the President, and Local Government Units (LGUs). Every online petition that garners at least 15,000 signatures should instantly require Congress, Senate, or the President to respond formally about their stand and/or action/s on the petition’s proposal. Every online petition proposing a legislative bill that garners at least 150,000 signatures should be instantly converted into a House and Senate bill by the pertinent House and Senate Committee within 1 month from the petition milestone, and shall be treated as such all throughout the legislative cycle. Every online petition compelling Congress and Senate to immediately pass a pending House and/or Senate bill that garners a number of signatures equivalent to 2/3 of the total number of registered voters, will automatically require Congress and Senate to pass the said bill and shepherd it into enactment before the legislative cycle ends. The same signature milestone is required to instantly repeal a law. Every online petition compelling the president to repeal an executive order that garners a number of signatures equivalent to 51% of the total number of registered voters, will automatically require the president to instantly repeal his/her executive order. Applicable petition thresholds for local ordinances and resolutions will be set by the Department of Interior and Local Government (DILG) through a memorandum to be issued within 2 years of this Act’s effectivity.

SECTION 6. Provision for Proposed Constitutional Amendments. Amendments to the Constitution may likewise be directly proposed by the people through this Act. The online petition milestone required for every such proposal is at least 12% of the total number of registered voters, of which every legislative district must be represented by at least 3% of the registered voters therein. Upon garnering the said petition milestone, the Commission on Elections (COMELEC) would certify the petition as valid and sufficient, and thereby hold a plebiscite on the matter as per the Constitution’s prescriptions.

SECTION 7. Prohibited Measures. The following cannot be the subject of any people’s initiative: petition embracing more than one (1) subject shall be submitted to the electorate; petition diluting and/or curtailing human rights and/or civil liberties; petition expanding the powers of the Senate, Congress, the president, state security forces, or the Supreme Court; petition to extend the term of office of any elected government official; petition to empower big corporations, dynasties, banks, financial institutions and similar powerful entities; petition to discriminate against particular groups and/or sectors; other patently unconstitutional measures – which may be only allowed for petitions for constitutional amendments, for which all the preceding prohibitions are still applicable.

SECTION 8. Encouraged Measures. The following measures are highly encouraged to be the subject of any people’s initiative: petition to expand human rights and/or civil liberties; petition to dilute the powers and/or influence of big corporations, dynasties, banks, financial institutions and similar powerful entities; petition for progressive tax measures; petition against regressive tax measures; petition to compel Congress and Senate, or the president to enact pertinent enabling laws mentioned in the Constitution; other petitions that are pro-people in nature.

SECTION 9. Funding. This Act shall be funded through general appropriations.

SECTION 10. Implementing Rules and Regulations. The DICT, in coordination with pertinent agencies, representatives of people’s organizations and sectoral organizations, and experts on people’s initiatives, will draft and release the implementing rules and regulations of this Act, not later than 3 months from its effectivity.

SECTION 11. Separability Clause. In case any provision in this Act shall be declared invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired.

SECTION 12. Repealing Clause.  All laws, decrees, executive orders, proclamations, rules and regulations, and other issuances, or parts thereof which are inconsistent with the provisions of this Act, are hereby repealed or modified accordingly.

SECTION 13. Effectivity Clause. This Act shall take effect upon its publication in at least two (2) national newspapers of general circulation.

APPROVED.

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References:

https://www.officialgazette.gov.ph/1989/08/04/republic-act-no-6735/

https://petition.parliament.uk/

https://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/34634

https://lawphil.net/judjuris/juri2006/oct2006/gr_174153_2006.html

http://legacy.senate.gov.ph/lis/bill_res.aspx?congress=13&q=SBN-119

http://legacy.senate.gov.ph/lisdata/61835514!.pdf

 

Proposed Senate Bill 2021-2

FREE HEALTH CARE ACT

Explanatory note:

Our own experiences under the current health care system – especially as we all suffer under the now two-year old pandemic – can be summed up as a long, endless litany of financial crowdsourcing, online begging, and medical-related bankruptcies which, unfortunately are not being discussed (or even considered as a problem) by mainstream political groups. In the Philippine Congress, only the Makabayan Bloc has seriously taken health care as an urgent policy concern which it aims to address through House Bill 9515 (“AN ACT PROVIDING FOR A FREE, COMPREHENSIVE, AND PROGRESSIVE, NATIONAL PUBLIC HEALTH CARE SYSTEM”) which was filed just last May 29, 2021. Outside the halls of Congress, Laban ng Masa’s platform for the 2022 elections include funding a “universal health care program delivering quality, preventive care for free.”

Meanwhile, no sitting senator has come up with a Senate version of Makabayan Bloc’s bill, despite the current Senate’s nominal support for Universal Health Care. This proposed Senate bill intends to fill such gap.

Universal Health Care in the Philippines was nominally adopted in 2019 through Republic Act No. 11223 or the Universal Health Care Act. While such policy shift enabled the Philippine government to provide free health services to the poorest segments of society, its framework still allows the collection of co-payments beyond the maximum amount per illness and per type of service covered by the national public health insurance system, run by the Philippine Health Insurance Corporation or PhilHealth. Hence, our country’s citizens remain burdened with huge out-of-pocket payments (OOPPs) from medical consultations to prescription medicines, and from major surgical operations to rehabilitation procedures. Out-of-pocket expenditure as % of current health expenditure amounts to almost 54% of the country’s total health spending in 2018, lower than the all-time high of 58.9% in 2011 but way above the all-time low of 41.2% in 2000, in contrast with the global average pegged at just slightly more than 18% in 2018 and peaking at 19.3% in 2000 (World Bank, 2021). Among Southeast Asian countries, the Philippines is the third worst country when it comes to OOPPs.

The current Senate bill intends to establish a genuinely 100% FREE HEALTH CARE SYSTEM for every Filipino citizen, thereby reducing OOPPs to zero.

Be it enacted by the Senate and the House of Representatives of the Philippines assembled. 

SECTION 1. Short Title. This act shall be known and cited by its short title “Free Health Care Act of 2021.”

SECTION 2. Declaration of State Policy. Protection and promotion of the people’s right health, as a state policy enshrined in ARTICLE II, Section 15 of the 1987 Philippine Constitution is hereby reiterated and implemented:  “The State shall protect and promote the right to health of the people and instill health consciousness among them.”

SECTION 3. Coverage. This Act shall cover the whole health care system in the Philippines.

SECTION 4. Free Health Care Services in Public Clinics, Laboratories, Pharmacies, & Hospitals. This Act hereby provides for free health care services in all government-owned and/or government-run clinics, laboratories, pharmacies, and hospitals.

SECTION 5. Prohibition Against Out-of-Pocket Payments in Public Health Care Facilities. All public clinics, laboratories, pharmacies, and hospitals are hereby prohibited from collecting any payment from Filipino citizens.

SECTION 6. De-commodification of Health Care in Private Facilities. In the period of transition, while the government is in the process of making the public health care system sufficiently capable of serving all citizens’ health care needs, private health care facilities are hereby required to de-commodify health care services they offer by eliminating profit-taking in their systems.

SECTION 7. International Benchmarking. The Department of Health and other pertinent agencies, in consultation with public health advocacy groups and public health care professionals and researchers, are given 6 months from this Act’s effectivity to ensure that the country’s public health care system is aligned with the standards of robust public health care systems in both developing and developed countries.

SECTION 8. Transition Period. For a period of 3 years from this Act’s effectivity, the government will ensure that the country’s public health care system is capable of efficiently serving the needs of all Filipino citizens during which: every barangay should have at least one functioning health care center, with stationed general practitioners, midwives, and nurses everyday; every congressional district should start having at least one public general hospital capable of most types of surgery, one public pharmacy, and one diagnostic laboratory; the country should strive to achieve a doctor-patient ratio of 1:200.

SECTION 9. Nationalization of Giant Pharmacies & Big Private Hospitals. Within the period of transition, the government will nationalize giant pharmacies and big private hospitals, with adequate compensation for small and medium-sized shareholders, and with a negotiated rate for corporate ones.

SECTION 10. Public Health Insurance Premium. Within the period of transition, PhilHealth will be abolished, and its personnel will be absorbed by the public health care system. After its abolition, all PhilHealth funds would be directly rechanneled to the public health care system. Payment of premiums by all employers and employees will continue at current rates, subject to possible reduction through an act of Congress, a presidential executive order, or a recommendation from the Department of Finance, after the period of transition. From the effectivity of this Act, premiums are hereby labeled as “public health insurance premium.” All private Health Maintenance Organizations (HMOs) will be deemed dissolved as soon as PhilHealth is abolished. Henceforth, those who previously paid premiums to private HMOs would be encouraged to pay additional public health insurance premium commensurate to rates they have paid to private HMOs. Such additional public health insurance premium will be deductible from their payable personal income tax.

SECTION 11. Funding. All public health care services will be funded by public health insurance premium, and yearly subsidies from the general appropriations.

SECTION 12. Implementing Rules and Regulations. The Department of Health, in coordination with pertinent agencies, public health advocacy groups, and representatives of health care personnel and health care researchers, will draft and release the implementing rules and regulations of this Act, not later than 3 months from its effectivity.

SECTION 13. Separability Clause. In case any provision in this Act shall be declared invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired.

SECTION 14. Repealing Clause.  All laws, decrees, executive orders, proclamations, rules and regulations, and other issuances, or parts thereof which are inconsistent with the provisions of this Act, are hereby repealed or modified accordingly.

SECTION 15. Effectivity Clause. This Act shall take effect upon its publication in at least two (2) national newspapers of general circulation.

APPROVED.

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References:

https://dmmsanjuan.com/2021/06/08/shaping-the-agenda-for-the-2022-elections-building-a-national-health-services-nhs-for-the-philippines-towards-achieving-100-free-health-care-for-everyone/

https://globalnation.inquirer.net/194671/laban-ng-masas-declaration-and-platform-for-2022-election

https://congress.gov.ph/legisdocs/basic_18/HB09515.pdf

Proposed Senate Bill 2021-1

TAX REFORM ACT FOR THE MASSES AND THE MIDDLE CLASS (TRAMM)

Explanatory note:

As poverty thresholds in the Philippines are notoriously low, the actual number of poor Filipinos is understated. Segments of those classified in government databases as low-income-but-not-poor or middle-income households are actually poor, especially if multidimensional perspectives on poverty will be used as metrics.

The establishment of a progressive tax system – a declared State policy in the Philippine Constitution – could help achieve the goals of redistributing wealth among broader segments of the population, by shifting the tax burden away from personal incomes/compensation & poor and middle-class consumption, and towards corporate income and wealthy people’s expenditures.

Unfortunately, past tax “reform” laws – namely, TRAIN and CREATE – offered little benefits to poor and middle-class families while giving away further bonanzas for the very wealthy few. As a result, the Philippines remains among the most unequal/inegalitarian societies in the world, with the income shares of the poorest and richest segments of the population almost stagnant for decades now.

This proposed “Tax Reform Act for the Masses and the Middle Class (TRAMM)” would help address such imbalance, in favor of poor and middle-class households in the country that bear most of the tax burden but are unable to reap benefits from the economic system, while the richest clans gobble up much of the wealth that the former have mostly created.  

~~~

Be it enacted by the Senate and House of Representatives of the Philippine Congress assembled:

Section 1. Short Title. This Act shall be known as the “Tax Reform Act for the Masses and the Middle Class (TRAMM).”

Section 2. Declaration of Policy. The Philippine Constitution’s declared policy on progressive taxation (Article VI, Section 28) and the goals of the national economy towards a more equitable distribution of opportunities, income, and wealth (Article XII, Section 1) are hereby reiterated and implemented.

Section 3. Maximum Personal Income Tax Rate. The maximum personal income tax rate is hereby capped at 15% of the taxable income.

Section 4. Progressive Personal Income Tax Rate. The Bureau of Internal Revenue shall release an updated progressive personal income tax schedule with rates ranging from 1% to 15% of the taxable income.  

Section 5. Personal Income Tax Exemption. The first 500,000 pesos of every citizen’s individual income is exempted from the personal income tax.

Section 6. Tax-Free Status of 13^th Month Pay. Every citizen’s 13^th month pay below the amount of 120,001 pesos is hereby exempted from any tax.

Section 7. Additional Exemption. Subject to the law’s implementing rules and regulations, the following citizens can apply for additional exemption at 25,000 pesos per instance: a) qualified dependent child and/or adoptee (capped at 5 children and/or adoptees); b) benefactor of a senior citizen – a parent or relative – with no pension or who is just receiving the basic social pension (capped at 2 per taxpayer).

Section 8. Value-Added Tax (VAT)-Exempt Transactions. On top of current exemptions, the following transactions shall be also exempt from VAT:

1. Purchase of all food items (except junk foods, soft drinks and other similar products to be listed in the implementing rules and regulations), medicines, and utilities for household use such as water, electricity, and internet;
2. All first home purchase – house and lot, residential condominium or any similar housing unit – of every citizen;
3. Lease of a residential unit with a monthly rental not exceeding 20,000 pesos;

Section 9. Regular Corporate Tax Rates. The regular corporate tax rate for large corporations is hereby restored to 30%, and retained at 20% for small businesses.

Section 10. Special Corporate Tax Rate Reduction for Profit-Sharing Firms. Large corporations and small businesses can apply for a special 5% reduction in the applicable regular corporate tax rate, provided that they establish and implement a functioning profit-sharing mechanism in favor of their workers/employees, subject to annual application and approval by BIR and DOLE.

Section 11. Minimum Corporate Income Tax Rate. The minimum corporate income tax rate is hereby restored to 2% for domestic and resident foreign corporations.

Section 12. Final Tax on Sweepstakes and Lottery Prizes. The final tax on sweepstakes and lottery prizes above 1,000,000 pesos is now pegged at 20%.

Section 13. Improperly Accumulated Earnings Tax (IAET) Rate. The IATET is hereby restored to 10% of net taxable income.

Section 14. Cash and Property Dividend Tax. The following rates are hereby implemented:

1. For an individual shareholder who is either a Filipino citizen or alien resident of the Philippines, cash and property dividends received are subject to a final withholding tax rate of 12%
2. Cash and property dividends received by another domestic corporation or by a resident foreign corporation shall be subject to a 20% tax.        

Section 15. Tax on Stock Trade Transactions. The following rates are hereby implemented for transactions beyond 100,000 pesos:

1. 2% sales tax on gross selling price
2. 1% stock buyer’s tax on gross purchase price
3. Double the regular rates for transactions beyond 1,000,000 pesos
4. Triple the regular rates for transactions beyond 1,000,000,000 pesos

Section 16.  Progressive Estate Tax Rate. The progressive estate tax rate ranging from 5% to 20% is hereby restored for every estate worth 3,000,001 pesos and above, while an estate worth below 3,000,001 pesos will be exempted from the estate tax.

Section 17. Withholding Tax on Interest Earned From Local and Foreign Currency Deposits. Tax on interest earned beyond 100,000 pesos (or its foreign currency equivalent) shall be pegged at 25%.  

Section 18. Citizenship Milestone Cash Awards. On top of existing programs and grants, a special one-time cash payment will be given to every citizen who reaches the following milestones:

1. For every citizen who reaches 18 years of age: 500,000 pesos, provided that he/she has registered to vote, is enrolled in or was able to complete senior high school studies, to be retroactively implemented from 2014 onwards.
2. For a citizen seeking to buy his/her first home: 500,000 pesos or 20% of the total contract price (whichever is higher) upon signing of the contract to sell, to be retroactively implemented from 2000 onwards;
3. For an agrarian reform beneficiary: 500,000 pesos or 20% of the total assessed value of the land awarded (whichever is higher) upon receipt of CLOA or any similar document, to be retroactively implemented for all land reform beneficiaries and/or their direct heirs from 1988 onwards.
4. 250,000 pesos for every citizen who reaches 60 years of age, provided that he/she has worked in the country for at least 15 years and is projected to receive only a pension equivalent to any amount below the maximum SSS monthly pension upon retirement, to be retroactively implemented from 2000 onwards (not for heirs).
5. 250,000 pesos for every citizen who reaches the mandatory age of retirement, provided that he/she has worked in the country for at least 15 years and that he/she will be receiving only a pension equivalent to any amount below the maximum SSS monthly pension, to be retroactively implemented from 2000 onwards (not for heirs).
6. Subject to the consultation with concerned groups and individuals, those tasked with writing the implementing rules and regulations of this law will devise a cash award similar to 4 and 5 for those not employed in the formal sector.

Section 19. Implementing Rules and Regulations. The Bureau of Internal Revenue and the Department of Labor and Employment will lead the crafting of the IRR which will be finalized with the help of concerned groups such as consumer advocacy groups, labor unions/federations, NGOs, people’s organizations, civil society organizations and the like, within 100 days after the president has signed the law.

Section 20. Separability Clause. If any of the sections or provisions of this Act is held invalid, all the other provisions not affected thereby shall remain valid.

Section 21. Repealing Clause. All laws, decrees, orders, resolutions, instructions and rules and regulations or parts thereof which are inconsistent with this Act are hereby deemed repealed or modified accordingly.

Section 22. Effectivity.  This Act shall take effect 15 days following its complete publication in the Official Gazette or in at least one (1) newspaper of general circulation.

Further readings:

This article features a short critique of official poverty statistics, and emphasizes that poor and middle-class households’ budgets are heavily taxed (e.g. VAT on their typical expenditures on food and utilities): https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3571402

News on US Treasury Secretary’s call for a global minimum corporate tax: https://apnews.com/article/janet-yellen-minimum-global-corporate-income-tax-0a839a4705566a8b9f8bd5411bfe62d5

IBON Foundation’s critique of the corporate tax reduction in the Philippines: https://www.ibon.org/duterte-govt-giving-up-php667-b-in-potential-covid-response-funds-to-boost-corporate-profits/

On the necessity of higher corporate tax, tax on wealth, and cash grants to combat inequalities, Thomas Piketty’s books Capital in the Twenty-First Centuryand Capital and Ideology are instructive  

A European study that proves “Reducing VAT rates drives down prices and boosts demand”: https://ec.europa.eu/taxation_customs/sites/taxation/files/resources/documents/taxation/vat/how_vat_works/rates/study_reduced_vat.pdf

News article on IMF’s recent call for a tax on wealth: https://www.theguardian.com/business/2021/apr/07/imf-wealth-tax-cost-covid-pandemic-rich-poor

Sen. Sonny Angara’s article on the Philippine middle class’ over-taxed situation: https://opinion.inquirer.net/77762/overtaxing-working-middle-classes

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Senate Bill 2020-1 (Urban Land Reform Act/Homes for Every Filipino Act/Batas sa Pabahay para sa Lahat)

AN ACT IMPLEMENTING URBAN LAND REFORM TO PROVIDE HOMES FOR EVERY FILIPINO

Proposed by David Michael M. San Juan

Explanatory Note

Homelessness has always been a problem for the Philippines. It was in this context that ARTICLE XIII (SOCIAL JUSTICE AND HUMAN RIGHTS), Section 9 (URBAN LAND REFORM AND HOUSING) of the 1987 Philippine Constitution was crafted:  “The State shall, by law, and for the common good, undertake, in cooperation with the private sector, a continuing program of urban land reform and housing which will make available at affordable cost, decent housing and basic services to underprivileged and homeless citizens in urban centers and resettlement areas…” (emphasis supplied).

Post-Edsa I, fast forward to 2020, no meaningful and comprehensive urban land reform law has been passed (or filed in Senate, in fact). Existing laws (Urban Development and Housing Act/UDHA of 1992) and filed bills in Congress (e.g. House Bill No. 159 filed during the 1st Regular Session of the 18th Congress in July 1, 2019) are either unable (or not radical enough) to solve the problem. Consequently,  homelessness is still a big problem in the Philippines today, as proven by the oft-quoted statistics on the number of homeless Filipinos which stands at 4.5 million (The Borgen Project, 2020; Chandran, 2018; Jena, 2020; Santos, 2020; Balanza, 2019;  Kadamay/Kalipunan ng Damayang Mahihirap/National Alliance of Filipino Urban Poor, 2017; Lucenio, 2020; Senate of the Philippines, 2019; Elao, 2020). 

According to the Results of the 2015 Census of Population (Philippine Statistics Authority, 2018) – the latest available, as the 2020 census is still on-going – only 55.3% of Philippine households own their house and lot or have an “owner-like possession” of such, while 12.1% of households  rent their house/room including lot. In contrast, 90.4% of Singaporean households own their homes (Singapore Department of Statistics, 2019).

This proposed landmark legislation will thus bring Philippine home ownership closer to desirable Singaporean standards, through a meaningful and comprehensive urban land reform law.

Be it enacted by the Senate and the House of Representatives of the Philippines assembled. 

SECTION 1. Short Title. This act shall be known and cited by its short title “Homes for Every Filipino Act of 2020.”

SECTION 2. Declaration of State Policy. Urban land reform towards home ownership for every Filipino, as a state policy enshrined in ARTICLE XIII (SOCIAL JUSTICE AND HUMAN RIGHTS), Section 9 (URBAN LAND REFORM AND HOUSING) of the 1987 Philippine Constitution is hereby reiterated and implemented:  “The State shall, by law, and for the common good, undertake, in cooperation with the private sector, a continuing program of urban land reform and housing which will make available at affordable cost, decent housing and basic services to underprivileged and homeless citizens in urban centers and resettlement areas…”

SECTION 3. Coverage. This Act shall cover all corporate-owned residential buildings and residential subdivisions and similar estates, all corporate-owned and privately-owned idle lands in urban areas, and public lands suitable for housing development.

SECTION 4. Decorporatization and Decommodification of Housing. This Act hereby de-corporatizes and decommodifies housing in the Philippines by banning big real estate firms from owning residential buildings and residential subdivisions and the like, and automatically transferring the rights and ownership to the said estates to the government, for the purpose of urban land reform directed towards achieving mass home ownership.

SECTION 5. Compensation for Real Estate Firms. The Central Bank is hereby authorized to compensate all affected real estate firms, at a reasonable rate and schedule to be determined, in the implementing rules and regulations of this Act.

SECTION 6. Limitation on Owning Idle Lands. Any corporation or individual is hereby authorized to retain only up to 500 square meters of idle land at any given city. Idle lands beyond such retention limit will automatically revert to public ownership.

SECTION 7. Compensation for Idle Lands Beyond the Retention Limit. The Central Bank is hereby authorized to compensate all affected real estate firms and individuals, at a reasonable rate and schedule to be determined, in the implementing rules and regulations of this Act.

SECTION 8. Interest-Free Loans to Develop Idle Lands Within the Retention Limit for Individuals. The Development Bank of the Philippines is hereby authorized to offer medium-term, interest-free loans to individuals who would like to develop idle lands within the retention limit, for family and/or charitable housing projects, to encourage utilization of idle lands.

SECTION 9.   Selling of Units from Decorporatized and Decommodified Residential Buildings and Subdivisions. Home Development Mutual Fund/HMDF/Pag-ibig Fund is hereby authorized to sell all units from decorporatized and decommodified residential buildings and subdivisions to HMDF members, via its loan facility.

SECTION 10. Full Subsidy for Equity/Downpayment for Decorporatized and Decommodified Residential Buildings and Subdivisions. Subject to the IRR of this law, HMDF is authorized to develop a program to fully subsidize equity/downpayment of HMDF members who would want to avail of such benefit.

SECTION 11. Affordability of Housing Price and Loans. HDMF is hereby ordered to ensure that all residential units to be sold under this Act, are made affordable for the average Filipino family. Furthermore, HDMF is hereby required to always offer a below-the-market interest rate for housing loans under this Act.

SECTION 12. Establishment of the Philippine Home Development Bank. The Central Bank is hereby ordered to help the HDMF is establishing the Philippine Home Development Bank that will specialize in financing small-scale, community-managed housing projects to be led by urban poor organizations, in idle lands beyond the retention limit.

SECTION 13. Universal Membership in HDMF. The HDMF is hereby authorized to craft a feasible plan towards achieving universal membership of working-age Filipino citizens in HDMF, subject to the law’s IRR.

SECTION 14. Implementing Rules and Regulations. The Department of Human Settlements, in coordination with housing rights NGOs and urban poor organizations, HDMF and Central Bank will draft and release the implementing rules and regulations of this Act, not later than 3 months from its effectivity.

SECTION 15. Separability Clause. In case any provision in this Act shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

SECTION 16. Repealing Clause.  All laws, decrees, executive orders, proclamations, rules and regulations, and other issuances, or parts thereof which are inconsistent with the provisions of this Act, are hereby repealed or modified accordingly.

SECTION 17. Effectivity Clause. This Act shall take effect upon its publication in at least two (2) national newspapers of general circulation.

APPROVED.

References:

Chandran, Rina. 2018. “Manila’s homeless set to move into more empty homes if official handover delayed.” https://www.reuters.com/article/us-philippines-landrights-lawmaking/manilas-homeless-set-to-move-into-more-empty-homes-if-official-handover-delayed-idUSKBN1H41L7

Ellao, Janess Ann. 2020. “#COVID19Quarantine | Urban poor group reminds gov’t 4.5M Filipinos don’t have a home.” https://www.bulatlat.com/2020/03/17/covid19quarantine-urban-poor-group-reminds-govt-4-5m-filipinos-dont-have-a-home/ 

Jena, Sujata. 2020. “A Journey with the homeless.” https://www.globalsistersreport.org/news/journey-homeless

Senate of the Philippines. 2020. “ANGARA: ACTION MUST BE TAKEN TO AVERT HOUSING CRISIS.” https://www.senate.gov.ph/press_release/2019/0331_angara1.asp

Santos, Ana. 2020. “Poverty punished as Philippines gets tough in virus pandemic.” https://www.aljazeera.com/news/2020/04/poverty-punished-philippines-tough-virus-pandemic-200413063921536.html

The Borgen Project. 2020. “THE STATE OF HOMELESSNESS IN THE PHILIPPINES.” https://borgenproject.org/homelessness-in-the-philippines/

KADAMAY. 2017. “Claiming Housing Rights.” https://www.ohchr.org/Documents/Issues/Housing/HousingStrategies/KadamayPhillippines.docx

Philippine Statistics Authority. 2018. “Housing Characteristics in the Philippines (Results of the 2015 Census of Population).” https://psa.gov.ph/population-and-housing/node/129804

Singapore Department of Statistics. 2019. “Households.” https://www.singstat.gov.sg/find-data/search-by-theme/households/households/latest-data

Belmonte, Jose Christopher. 2019. “House Bill 159.” http://www.congress.gov.ph/legisdocs/basic_18/HB00159.pdf

 

Source of featured image: http://www.volunteerkitsap.org/agency/detail/?agency_id=72629