Group urges Senate to scrap tax incentives for San Miguel Aerocity’s airport franchise

Published October 1, 2020, 4:27 PM

by Alexandria Dennise San Juan

A group of transport experts and economists called on the Senate to scrap the tax exemption provision under the bill granting San Miguel Aerocity Inc. a franchise to build the New Manila International Airport in Bulacan.

In a press briefing led by local think tank Action for Economic Reforms (AER) Thursday, the group urged the Senate to strike down the proposed measure that seeks to grant San Miguel Aerocity exemptions from all national and local taxes for up to 50 years.

Engr. Rene Santiago, who has been a consultant for the Japan International Cooperation Agency (JICA) in their transportation studies in the country, also emphasized that there is no justification behind granting tax exemptions to San Miguel as it would only “tilt the balance in its favor.”

“Let us not open the floodgates for abuses. What (incentives) you give to one private proponent, you have to give to everybody,” he said during the virtual conference.

Santiago said that based on current supply and demand conditions, there is no need for the firm to develop the Bulacan airport, adding that it would only be needed if NAIA will be closed.

“In the aggregate, the expanded capacity of NAIA and Clark International Airport is 70 million by 2030. This is enough to satisfy the current demand,” he explained.

According to Santiago, the proposed airport by San Miguel Aerocity also lacks accessibility via railways and expressway connections, which would be needed to attract NAIA’s passenger volume.

Meanwhile, former Tourism Secretary Alberto Lim said he viewed the San Miguel airport as a positive project but “should not be given incentives because it is an unsolicited bid.”

“There is already enough capacity in both NAIA and Clark. There are already government facilities that can satisfy the public good. Incentives should be given for projects that satisfy public good,” he added.

AER coordinator Filomeno Sta. Ana III pointed out that San Miguel is making an investment that will continue even without fiscal incentives, making these incentives “redundant.”

“Because supply is already adequate, the role of this airport is more of being a private good than a public good. Let them compete, but such competition should not be anchored on government incentives,” he said.

Sta. Ana added that the tax exemption provisions in the bill undermine the goal of the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) Bill, which is currently undergoing interpellation in the Senate.

“While (we) are not against the granting of the franchise itself, the government should not shoulder the risk of this project. If the corporation would like to apply for incentives, its application needs to be subject to the rigorous processes (mandated) in the CREATE Bill,” he said.