Warnings raised vs tax perks for SMC’s Bulacan airport project

Published October 2, 2020, 4:29 PM

by Chino S. Leyco

The proposed legislated franchise for the Bulacan airport project will imperil all existing and future tax laws in the country, economic and transportation experts warned.

In a virtual briefing, Action for Economic Reforms coordinator Filomeno Sta. Ana III and transportation expert Rene Santiago said that the franchise bid of San Miguel Aerocity Inc. is “very very dangerous” once enacted into law.

Sta. Ana explained the franchise measure, or Senate Bill 1823, does not only provide hefty tax incentives to San Miguel Aerocity, but also suppress the the country’s economic rules and democracy.

“It will supplant existing laws or future laws, and that is very very dangerous,” Sta Ana told reporters. “It will set a precedent, not only in relation to fiscal incentives, but also in relation to other rules.”

“Imagine, if we want to circumvent a particular law, or if you want to get away from a particular law, then let’s just get another law from Congress to supplant the existing law. That’s very dangerous, not only for the economic rules but even for democracy,” he added.

Santiago, for his part, said that the legislated franchise to build the New Manila International Airport in Bulacan will open the floodgates for all tax free investments in the country.

Citing the general rule of international treaties, Santiago said “if you give one party [the tax incentives it wanted], you must grant the same type of privileges to another party.”

“In effect, [it will] open the floodgates for all investors and that will be a major headache for the DOF [Department of Finance], and for future Filipinos,” said Santiago, who is a transportation consultant for the Japan International Cooperation Agency (JICA).

Related Story: Senate panel approves Bulacan international airport bill

For this reason, Santiago called on the Senate to strike down the tax exemption provision in SB-1823, saying there is no justification behind granting the project tax incentives.

Based on current supply and demand conditions, Santiago pointed out that there is no need for San Miguel Aerocity to develop the New Manila International Airport.

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

He said the Bulacan airport project would only be needed if NAIA were to be closed, because due to its location, the San Miguel Aerocity project cannot attract Metro Manila’s passenger volume.

The proposed airport lacks accessibility via railways and expressway connections, which would be needed in order to capture NAIA’s market, Santiago said.

“The access problem of San Miguel is so formidable, it will take at least 10 years for them to solve,” he added.

Sta. Ana, meanwhile, said that tax incentives should not be anchored on the amount of investments, but rather on whether a project’s social benefits will outweigh its private gains.

He added that San Miguel Aerocity is making a P530.8-billion airport investment which will continue even without fiscal perks, rendering 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.

Related story: DOF won’t support San Miguel’s tax breaks