The alarmed investors held an emergency meeting here yesterday upon learning that the Supreme Court, in a 32-page unanimous en banc decision, nullified Section 5 of Executive Order No. 80 and Section 4 of the Bases Conversion Development Authority’s Board Resolution No. 93-05-032 entitling Clark investors to tax privileges enjoyed in other economic zones in the country.
Clark investors learned about the decision dated last July 29 only yesterday. "This is a disaster," said Elena Villarama, chairwoman of the Clark Investors and Locators’ Association (CILA).
She warned of widespread business shutdown at the Clark ecozone that could arise from the payment of back taxes, and the layoff of thousands of workers here.
CILA president Carmen MacTavish said the Supreme Court decision has made the Clark ecozone no different from other areas outside of any economic zone in the country.
The decision also affects former US military facilities at Camp John Hay in Baguio City and Poro Point in La Union.
Yaguchi showed the media records stating that the 16 Japanese firms export some $61 billion worth of products monthly and employs about 4,413 people, mostly from communities around Clark.
He said Japanese investors are now eyeing India, Vietnam and Thailand as alternative sites for their investments.
Villarama said the Supreme Court decision means that business establishments at the Clark ecozone are not exempted from paying 32 percent corporate income tax, 10 percent value added tax, and tax on imported raw materials, among others, from which they have been spared since they invested here.
The tribunal said such tax privileges apply to the Subic Freeport since it is the only former US military camp that could legally grant tax incentives to locators.
But it ruled that the $100 monthly duty free shopping privilege granted to residents of communities around both Clark and Subic was illegal.
Lito Mercado, president of ClarkTel which provides telephone service at the ecozone, said his company now has to increase its rates as a result of the Supreme Court decision because it now has to pay 10 percent VAT on its operations here.
"This means that other utility firms will also be increasing their rates," he said.
Presidential Adviser for Northern Luzon Renato Diaz admitted that the Supreme Court decision would mean that Clark locators would have to pay back taxes.
He cited a portion of the Supreme Court decision stating, "since tax and duty-free incentives are in the nature of tax exemptions, (their) basis should be categorically and unmistakably expressed from the language of that law."
"This means that the Supreme Court merely wanted a clarification of the intent of congressmen who made the bases conversion law and we have no less than 180 members of Congress who have expressed support for Concurrent Resolution No. 9 clarifying that the law was meant to include Clark and other economic zones in the special tax privileges," Diaz said.
Despite the Supreme Court ruling, he said the Bureau of Internal Revenue and Bureau of Customs are not expected to run after Clark investors "precisely because the executive (branch of government) wants the law clarified to include Clark."
Once both the House and Senate agree to the resolution, Diaz said it would be submitted to Malacañang for the President’s approval.
"Then the resolution will have the effect of law. It’s just a matter of time," he said.
Diaz, however, could not say when Congress is expected to act on the resolution which would clear what businessmen here described as "a debilitating atmosphere of insecurity."