Amid veto calls, DOF to look into CREATE bill “insertions”

carlos dominguez

Sec. Carlos Dominguez III said that the Department of Finance (DOF) will look into the supposed insertions Congress made in its version of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) bill, which advocacy group Action for Economic Reforms (AER) wants vetoed by Pres. Rodrigo Duterte.

In a report by the Philippine Daily Inquirer, Dominguez pointed out that the reported insertions, which would benefit Petron’s refinery in Limay, Bataan, did not come from the DOF. The secretary added that as per his recollection, Congress has yet to submit its approved version of the bill to Malacanang.

“One particularly controversial insertion is Section 295 paragraph G, a provision exempting local petroleum refineries from paying taxes and duties on crude oil imports. Another provision in Section 296 inserts crude oil refining in the Strategic Investment Priority Plan (SIPP), which outlines the activities qualified to receive incentives,” AER pointed out in its statement last Monday.

The bicameral conference committee (bicam), composed of selected senators and congressmen, normally meet to iron out differences in the two chambers’ final versions of a proposed law. However, AER questioned the outcome of the bicam’s meet for the CREATE bill.

“CREATE came out of the bicam with completely new provisions which did not exist in either of the Senate nor the House bills. By the time the public got wind of these insertions, both houses of Congress ratified the bill, bypassing any opportunity for public debate,” AER emphasized.

Prior to the bicam, both the House of Representatives and the Senate passed the bill, with the latter approving it on third and final reading on November 26, 2020. A month before that, Petron President and CEO Ramon Ang said that he would close the Bataan refinery “very soon” over what he calls as unfair taxation, specifically under the controversial Tax Reform for Acceleration and Inclusion (TRAIN) law.

“The reality is that our local refineries are not economically viable. To repeat what [Dominguez] said, crude oil refining in the country is uncompetitive, and hence does not deserve tax incentives..Keeping our remaining oil refinery is more an emotional reaction than it is a sound economic policy. The general consuming public would actually be better off importing cheaper refined petroleum products,” the statement said further.

Dominguez had said that the oil giant’s woes with regard to the refinery wasn’t a tax issue, but more of a supply chain concern.

Petron’s Bataan refinery, which is now on an economic shutdown, is the only remaining facility of its kind in the country. Shell closed its facility in August 2020 due to unprofitable margins aggravated by the COVID-19 pandemic and has since then converted it into an import terminal. Chevron, meanwhile, folded its refinery in 2003.

The refinery was included in the Freeport Area of Bataan, which enjoys tax incentives, but the oil giant still pushed through with the refinery’s temporary closure.

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