House Ways and Means Committee chair, Albay Rep. Joey Sarte Salceda, principal author and sponsor of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law, has assured that the agriculture sector will receive “generous” tax incentives under the measure.
Salceda said he is “closely working with the Finance, Trade and Industry, and Agriculture Secretaries” to include several agricultural subsectors in the Strategic Investment Priorities Plan (SIPP), the list of industries eligible for tax incentives under CREATE.
“Last week, we worked with Agriculture Secretary William Dar to craft a list of agriculture sectors for inclusion in a ‘transitional’ SIPP, which will be the basis for granting and upgrading tax incentives under CREATE, until a more comprehensive list is finished,” he shared.
Salceda explained that “by giving key agriculture sectors tax incentives, we can lower production costs and encourage farm modernization. That will lower consumer prices and boost domestic food supply. It’s a positive approach to encouraging domestic food production without choking our own food supply by preventing imports. Besides, preventing importation through trade barriers is unsustainable. There is no substitute to direct and positive support to the agriculture sector,” he stressed.
Under the proposed transitional SIPP, which is now being considered for approval by the Fiscal Incentives Review Board, domestic production and the DA’s food security programs will receive more basic incentive packages. Precision agriculture, controlled-environment farming, biosecurity systems and other modern agricultural techniques and requirements are likely to receive the highest level of tax incentives, Salceda added.
Once included under the CREATE law SIPP, export-oriented agricultural enterprises will be entitled to up to 17 years of incentives, with 4 to 7 years of income tax holiday (ITH) and 10 years of special corporate income tax (SCIT). Domestic-market agri-enterprises may qualify for up to 12 years of incentives, with 4-7 years of ITH and 5 years of SCIT for enterprises with investment capital not less than P500 million, and 5 years of enhanced deductions otherwise.
Salceda said cheaper food prices “will be absolutely crucial to economic recovery.” He added that food prices will significantly affect economic recovery and poverty reduction, for which reason, he is “working hard with the Cabinet members to move agriculture forward because cheaper food will be absolutely crucial to economic recovery.”
“The reason why we want to maximize CREATE for agriculture is because agriculture is our most investment-hungry sector. So, it will have a sponge-like effect on the liquidity in the market during the pandemic. Due to its low base effects, it also has the potential to generate the fastest growth among all major sectors, if we can get significant foreign and domestic investment in the sector,” he said.
Salceda emphasized that prioritizing agriculture will be the country’s “most important weapon against inflation, and therefore, against poverty. With the way we release so much cash in the market through lower interest rates and government stimulus, prices will rise unless we can counteract them with larger food supply.”
“Inflation is the biggest threat to economic recovery, and food inflation drive general inflation. If we can keep food prices stable with the help of the
CREATE Law, we can also keep working Filipino families from falling into poverty. When we make food affordable, we help the poor the most. It’s a simple but universal economic principle,” Salceda, a noted economist, explained.