February 24, 2024

Salceda: Revenues from approved reclamation projects can generate P432 bn in land sale taxes alone

HOUSE Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) says that the 14 approved Manila Bay reclamation projects which are pending resumption due to a suspension ordered by President Marcos can generate as much as P432 billion in national land taxes, including VAT, capital gains tax, and documentary stamp taxes. The House tax chair said that the President’s order “is a great opportunity to get reclamation right and actually gain its promised benefits.”

Salceda estimates that at least P23 trillion in land sales will result out of the 14 approved reclamation projects off Manila Bay, “enough to retire the country’s debt.”

Salceda agreed, however, that reclamation as a revenue source for the national government has not yet been maximized.

“It’s a great way to raise revenues without raising taxes. We already considered funding the military pension system out of reclamation rights during the time of PNOY. But the idea was ultimately shelved because most reclamation projects are local government projects,” Salceda added.

“But there are still national government tax implications. Reclaimed land is basically new land, so the land taxes that result out of it are really a way to conjure up new tax sources.”

Salceda praised President Marcos’s decision to “rethink reclamation so that we can have a truly serious national conversation on the costs and the benefits.”

“President Marcos’s decision is a good way to fix the fiscal side of reclamation projects,” Salceda said in comments after today’s tax panel hearing on the fiscal implications of the suspension order.

“Now we’re learning that reclamation projects, in fact, can be a way of funding socialized housing,” Salceda added.

Salceda says that the House tax committee is mulling the crafting of a fiscal framework for reclamation projects. The framework would include implementing Republic Act No. 7279 which requires that at least 50 percent of the income of the Philippine Reclamation Authority shall fund the National Housing Authority’s land acquisition projects. 

Salceda says the framework will also include a rule that 20 percent of reclaimed land should be used for low-cost housing, “or some sort of alternative compliance. This is what Singapore did.”

The fiscal framework will also include some adjustment to the dividend remittance policy of the PRA, granting it relief from the requirement of the Dividend Law that the GOCC should remit 50% of its net earnings to the Treasury. 

Salceda adds that “we might consider minimums for terms of sharing of proceeds from reclamation.”

“That new fiscal framework could fund President Marcos’s ambitions for decent, affordable, and dignified housing in the country.”

Serious talk on reclamation needed

Salceda says that the country “needs to elevate the conversation on reclamation projects.”

“I think it’s time we have a serious conversation about reclamation. 20 percent of Tokyo Bay is reclaimed. 27 percent of Singapore’s land is reclaimed. The largest flood control project ever undertaken in the whole history of mankind, in the Netherlands, involved the creation of an entirely new province out of reclaimed land.”

“Reclamation can be flood control. It can be an ecological improvement, especially if it filters water quality in Manila Bay. And, as was made evident in our hearing, it is also an efficient source of tax revenues. But we need a science-based, data-driven conversation on this issue.”

The House tax panel will meet again on Monday to “hear the side of the DENR as well as key affected developers.