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SOURCE: Press and Public Affairs Bureau

House approves SMC Bulacan airport franchise
26 August 2020 04:39:54 PM

The House Ways and Means Committee has approved the draft substitute bill for the franchise granting permission to the leading conglomerate San Miguel Corporation’s plan to put up an international airport in Bulacan.

To be dubbed the “New Manila International Airport,” the new airport will be built in the coastal areas of Bulakan, Bulacan, around 30 kilometers north of Metro Manila. The plan is expected to decongest the Ninoy Aquino International Airport and support growth and development in Central Luzon.

The House Ways and Means Committee tackled the substitute bill for the franchise today, following earlier approval from the Committee on Legislative Franchises. Committee reports with significant tax implications are automatically referred to the Ways and Means Committee for its discussion and approval.

“The final report that came out of the tax committee, and following our own conversations with the House leadership, is significantly more tempered than the original. On its own, the project was already going to be beneficial, as a P740-billion infrastructure investment that will come entirely out of the private sector’s hands. That’s 4% of GDP. In return, we are being asked to provide some tax concessions. By tempering the tax provisions, we made sure that the Filipino people will get even more economic benefits for less taxpayer cost,” tax panel chair Salceda said.

Salceda adds that “by making the tax provisions fairer, we are making sure that the public gets more returns from this project.”

“Gusto kong matuloy ang project na ito. But we need stronger guarantees of returns for the public,” Salceda said during the hearing.

“The Bulacan airport project will make a lot of money. Anything beyond the 12% rate of return will be subject to 50-50 sharing,” Salceda added, referring to the profit-sharing agreement in the franchise, where, above a 12% profit margin, SMC’s subsidiary in charge of operating the airport will share half of its profits to the government, and all profits above 14%.

Salceda adds that it is critical that “all other income derived outside airport operations should be taxed regularly.”

“There will be hotels and restaurants in the surrounding ‘Airport City,’ so we want to make sure that the franchise’s tax privileges only extend to the airport operations,” Salceda explained.

Meanwhile, the Private Public Partnership (PPP) Center has assured the committee that the government will not have financial obligations to SMC.

“Walang ibabayad ang gobyerno,” PPP Center Chair Ferdinand Pecson said during the tax panel’s hearing.

Salceda says that the tax committee’s version “has made the final version more financially and economically beneficial to the Filipino people.”

“This is probably the biggest single-item investment in the country’s history. San Miguel is a Filipino company that has kept nearly all of its money here, to develop this country. They are doubling down on their commitment to Philippine development with this investment. I want the airport to happen on fair and equitable terms. That is why I worked with the leadership and my colleagues to come up with fairer tax provisions for the franchise. I am proud to have pushed for fairer tax benefits and an attractive profit-sharing scheme for the country. But, bottomline, I want the airport to happen,” Salceda said.

Salceda's tax committee has also promised the Committee on Legislative Franchises that they will look into "the social impact on the communities directly affected by the project; the estimated forgone revenues due to the tax exemptions to be granted under the measure; the projected employment generation; and the determination of the ‘competent authority’ referred to in Sections 17 and 18," who will decide when the tax exemptions for the grantee will expire.

From Ofc of Rep. Salceda