AFTER President BS Aquino 3rd’s sixth and final State of the Nation Address (SONA), the overwhelming volume of conversation about the 2 hour and 15 minute speech – one of the longest on record – was not about its contents, per se, but about how those contents were so little changed from any of the previous five SONA speeches.
Indeed, any listener could have been forgiven for thinking he was hearing, as PNoy made his opening his remarks with an unconvincing attempt to blame his predecessor for ills the country continues to suffer, a recording of the SONA from 2010. Or 2011, or 2012. Monday’s SONA was no more unique or enlightening than any of Aquino’s others, and after having listened to it for nearly two hours, it was difficult not to feel one’s time was being wasted.
Wasted, except for one relatively brief moment, in between the extended self-congratulations and the heaping of praise on his Cabinet members and close personal and political affiliates.
In a speech otherwise bereft of forward-looking plans and aspirations, Aquino called for the passage of three pending laws: the Rationalization of Fiscal Incentives, the Unified Uniformed Personnel Pension Reform Bill, and the so-called Anti-Dynasty Bill, which ironically would have spared us the disappointment of Aquino’s half-decade at the helm of the ship of state had it been in force when he decided to seek the presidency.
Chances of passage of any of these bills are said to be small. The Legislature is already wrestling with issues such as the Bangsamoro Basic Law, various investigations into anomalies such as widespread abuse found in military procurement procedures, and a host of other subjects. Still, Aquino exhorted his accommodating allies in the House and Senate to try, a challenge they gamely accepted.
Of the three, it is the Rationalization of Fiscal Incentives, or RFI, which both intrigues and concerns us.
The proposed law does have a praiseworthy rational objective: To organize and more effectively track and monitor tax and other fiscal incentives provided to investors. The law, as originally conceived, would also subject proposed incentives to analysis by government’s economic managers, particularly the National Economic Development Authority (NEDA), which would assess their positive and negative impacts on the greater economy.
Unfortunately, some proponents of the bill are still stubbornly pushing to include its dumbest feature, inclusion of planned incentive funds for the year in the General Appropriations Act. As has been pointed out by numerous critics of the hare-brained idea, all it would likely achieve is a scramble among prospective investors to capture as much of the incentive potential as early as possible, robbing government of the flexibility to apply incentives to projects where they would do the most good.
The pre-determined incentive pool would also discourage entry of new investors, further entrenching the five or six development conglomerates who seemed to have captured most of the market for infrastructure and other projects.
We would like to remind our legislators that a measure such as RFI is intended to encourage, not punish, investment interest in the Philippines. Certainly, better oversight, more consistent procedures, and more transparent information concerning fiscal incentives is a worthwhile goal. Beyond that, however, is an obvious point of diminishing returns, signified by the provision that requires incentives to be included in general appropriations act. Let’s not take the hint of a good idea, and turn it into a bad one.