Palace certifies resolution on Clark tax perks as urgent

CLARK FIELD, Pampanga — President Arroyo has certified as urgent a joint resolution pending in Congress upholding the tax and duty free privileges of investors at the Clark special economic zone.

Joint Resolution No. 9 seeks to "confirm the legislative intent" of Republic Act 7227, or the Bases Conversion and Development Act of 1992, which grants tax and duty free incentives to the Clark special ecozone and other special economic zones created by virtue of this law.

The Clark Development Corp. (CDC) said the President forwarded the certification to Senate President Franklin Drilon last Wednesday.

To date, 157 congressmen have signed the joint resolution, originally authored by Speaker Jose de Venecia. In the Senate, it has the support of Sen. Ralph Recto.

In her letter to Drilon, the President said the joint resolution is necessary "to address the urgent need to prevent the loss of huge investments in the country by assuring the anxious investors in Clark that incentives already granted would be fully respected."

Earlier, some Clark investors warned they would pull out their multibillion-peso investments and move to other countries after the Supreme Court, in a July 29 decision, nullified the tax and duty free incentives granted to them.

The tribunal nullified Section 5 of Executive Order No. 8 and Section 4 of the Bases Conversion Development Authority’s Board Resolution No. 93-05-032, which allowed Clark to grant the same privileges extended to companies at the Subic Bay Freeport.

The Supreme Court ruled that such tax privileges were limited only to the Subic Freeport, as explicitly provided in the Bases Conversion Law, and that only congressional acts, not presidential issuances, could extend tax privileges.

The decision virtually mandated Clark investors to pay corporate taxes, import duties on raw materials, value added tax, and other levies from the time they started operations here.

The decision also scrapped duty free shopping privileges at Clark.

Members of the Clark Investors and Locators Association described the tribunal’s verdict as a "disaster," warning that it could lead to shutdowns and mass layoffs affecting many of the ecozone’s 36,000 workers.

Presidential Adviser for North Luzon Renato Diaz said the joint resolution would be enough to resolve the controversy.

He cited a portion of the Supreme Court decision stating that "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 the law."

Diaz said this meant that the tribunal merely wanted clarification on the intent of Congress in passing the Bases Conversion Act.

"The intent was to include Clark and this is being clarified in the joint resolution," he said. — Ding Cervantes