THE government stands to lose as much as P432 billion in tax revenues if the suspension of reclamation projects in Manila Bay will last for five years, the chair of the House committee on ways and means warned yesterday.
Albay Rep. Joey Salceda said the 14 approved Manila Bay reclamation projects which are pending resumption due to a suspension ordered by President Marcos Jr. can generate as much as P432 billion in national land taxes, including VAT, capital gains tax, and documentary stamp taxes.
The House tax chair said that the President’s order “is a great opportunity to get reclamation right and actually gain its promised benefits.”
“The government is losing a lot because of the suspension. Our estimate is within five years because most of it are one-time transactions, right? The losses will reach as much as P432 billion,” Salceda said in an interview after a briefing attended by officials of the Philippine Reclamation Authority (PRA).
Last August, the President ordered the suspension of all 22 reclamation projects in Manila Bay pending a review of their compliance with environmental regulations.
The government decision was made amid the alleged questionable grant of permits by the Philippine Reclamation Authority. The projects are now indefinitely suspended pending an ongoing impact assessment by the DENR and a review of the projects’ compliance with the requirements and conditions stated in their environmental permits.
During the briefing, Salceda told the ways and means committee that the reclamation projects have been a “standard practice” in the largest cities in the world, citing Tokyo, of which 20 percent of its bay has been reclaimed, and Singapore, of which 22 percent of the land area underwent reclamation where one-third was utilized for socialized housing projects.
Salceda noted that 25 percent of developed land in Hong Kong has been reclaimed where 27 percent of its population resides in the area while 70 percent was used for business ventures.
“Reclamation is inevitable when developing large metropolitan cities bound by the sea, and Metro Manila is now the world’s most densely populated megacity,” he said. “Reclamation projects offer immense economic opportunities, and hence, offer opportunities to expand fiscal space. Through the years, I have been a key proponent of using reclamation development rights as a revenue-generating measure.”
Salceda estimates that at least P23 trillion in land sales will result out of the 14 approved reclamation projects off Manila Bay, “enough to retire the country’s debt.”
Salceda agreed, however, that reclamation as a revenue source for the national government has not yet been maximized.
“It’s a great way to raise revenues without raising taxes. We already considered funding the military pension system out of reclamation rights during the time of PNoy (President Benigno Aquino III) but the idea was ultimately shelved because most reclamation projects are local government projects,” he said. “But there are still national government tax implications. Reclaimed land is basically new land, so the land taxes that result out of it are really a way to conjure up new tax sources.”
Salceda praised President Marcos’s decision to “rethink reclamation so that we can have a truly serious national conversation on the costs and the benefits.
“President Marcos’s decision is a good way to fix the fiscal side of reclamation projects,” Salceda said. “Now we’re learning that reclamation projects, in fact, can be a way of funding socialized housing.”
Salceda said the House tax committee is mulling the crafting of a fiscal framework for reclamation projects, which would include implementing Republic Act No. 7279 which requires that at least 50 percent of the income of the Philippine Reclamation Authority shall fund the National Housing Authority’s land acquisition projects.
He said the framework will also include a rule that 20 percent of reclaimed land should be used for low-cost housing, “or some sort of alternative compliance. This is what Singapore did.”
The fiscal framework will also include some adjustments to the dividend remittance policy of the PRA, granting it relief from the requirement of the Dividend Law that the GOCC should remit 50 percent of its net earnings to the Treasury.
“That new fiscal framework could fund President Marcos’s ambitions for decent, affordable, and dignified housing in the country,” Salceda said.
