Citing "substantial fiscal risks," President Ferdinand "Bongbong" Marcos Jr. used his veto power for the first time to thumb down the proposed bill creating the Bulacan Airport City Special Economic Zone and Freeport.
In his veto message, Marcos said that while he recognizes the aim of House Bill No. 7575 to accelerate local economic growth, "fiscal prudence must be exercised particularly at times when resources are scarce, and needs are abundant."
"l cannot support the bill considering the provisions that pose substantial fiscal risks to the country and its infringement on or conflict with other agencies' mandates and authorities," he wrote.
In addition, Marcos said Republic Act (RA) No. 11534 already allows eligible enterprises to apply for and avail of tax incentives outside economic zones by providing a favorable incentive package without creating new special economic zones.
"Subject to the review and approval of the Fiscal Incentives Review Board, tax incentives may be availed by qualified enterprises and will be enjoyed longer if investments are located in less-developed areas," he noted.
President Marcos added that the proposed measure lacks coherence with existing laws, rules, and regulations by failing to provide audit provisions for the Commission on Audit, procedures for expropriation of lands awarded to agrarian reform beneficiaries, and a master plan for the specific metes and bounds of the economic zone.
Moreover, the enrolled bill grants the economic zone authority rule-making powers relative to environmental protection not found in the charter of other economic zones. It is also given blanket powers to handle technical airport operations in contravention of existing aeronautical laws.
UPDATE: President Bongbong Marcos vetoes bill creating a special economic zone and freeport in conglomerate in Bulacan, Press Secretary Trixie Cruz-Angeles confirms.
See Marcos's veto letter below: @manilabulletin pic.twitter.com/2gIoWhiANk
— Argyll Cyrus Geducos (@argyllcyrus_MB) July 2, 2022
Aside from this, Marcos pointed out that the construction of the proposed economic zone would be against the Government's policy on creating special economic zones in strategic locations as it would be near the Clark Special Economic Zone.
The National Economic and Development Authority and the Regional Development Council IIl likewise assert the need to thoroughly study and assess the costs to ensure that establishing the economic zone would benefit the whole country.
President Marcos added that, contrary to the Government's objective of developing a tax system with low rates and a broad tax base, the enrolled bill would "significantly narrow our tax base" with its mandated incentives applicable to registered enterprises.
"As the system would be rendered incapable of generating a yield sufficient to sustain the country's social and economic infrastructure, the Government would be forced to seek new sources of revenue through additional taxes or borrowings in the future," he said.
"In the end, it is the taxpayers who will ultimately bear the brunt of the burden," he added.