New land reform support law sought
Heeding President Ferdinand Marcos Jr.’s appeal for a loan condonation law for land reform beneficiaries in his State of the Nation Address, a congressional leader pushed for such a debt write-off and also threw in an estate tax amnesty for good measure.
Dubbing the bill as the “New Agrarian Emancipation Act,” Albay Rep. Joey Salceda said House Bill No. 3797 will benefit 654,000 land reform beneficiaries possessing 1.18 million hectares of awarded land.
The loan condonation plan also included an estate tax amnesty for those who have paid partial amortizations, which is seen to rake in P6.1 billion in additional collections every year.
Salceda, who also chairs the House of Representatives’ ways and means committee, cited a study by National Scientist and economist Raul Fabella, who estimated that in 2019 alone, “the economy lost P390 billion in economic activity due to suboptimal use of agrarian reform lands.”
The lawmaker said HB 3797 “will release farmers from debt and release lands from unproductive possession by condoning agrarian reform debts, lifting liens and encumbrances on agrarian reform land.”
Land reform beneficiaries are imposed an annual six percent interest, with the obligation to be paid in 30 years. Salceda said only 17 percent of beneficiaries were paying amortizations, resulting in “massive loan defaults.”
Proceeds for landowners
The bill proposes the loan condonation or write-off for agrarian reform beneficiaries, including unpaid amortizations, interests, penalties and surcharges.
The government will use the agrarian reform fund to pay the remaining balance of compensation due the concerned landowners.
Beneficiaries who are still to receive their awarded lands “shall do so without any obligation to pay any amortization,” while undistributed lands covered by the agrarian reform program “shall be distributed at no cost to the qualified beneficiaries.”
“This will allow the transfer of such lands to younger farmers or more efficient users, allow existing agrarian reform beneficiaries to collateralize their land for productive credit, and unlock transfer taxes for the national government,” Salceda said.
Salceda pointed out that the loan condonation will cost the government “some P58.125 billion in receivables that the government has found difficult to collect anyway.”
He first proposed the loan condonation as a private sector analyst in the 1990s and in 2007 as presidential chief of staff during the administration of then President Gloria Macapagal Arroyo, who is now a Pampanga representative.
“The productive capacities that such emancipation will unlock far outweigh the fiscal implications, which have already been incurred anyway,” Salceda said.
The bill also proposed an estate tax extension or amnesty for beneficiaries who paid any portion of the amortization and interest charges until June 30, 2025.
“I expect the measure to yield P6.1 billion in additional estate tax collections every year,” Salceda said.
The measure also pushed for the motu proprio dismissal of any pending administrative or judicial case involving the forfeiture of awarded lands due to the beneficiary’s failure to pay amortization or interest.
Beneficiaries who already completed their payments will be given preference in the provision of support services and access to credit facilities.
“This will serve as an equalizing provision for those who have exerted efforts to pay at least part of their amortizations,” Salceda said.