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Legarda seeks P30-Billion in Bridge Fund, Tax, Rent Relief for Restaurants, Workers

September 11, 2020

As the restaurant industry is now in dire crisis, Deputy Speaker Loren Legarda proposed a piece of legislation to help owners and thousands of employees survive the pandemic.

Legarda filed House Bill No. 7610 which seeks to provide what she called a P30-billion “bridge fund” for restaurants and a host of tax incentives and rent-payment extension schemes of up to 24 months to provide owners and their workers relief to cope with the economic crisis brought about by the COVID-19 pandemic.

Legarda’s bill seeks “to revive the restaurant industry for a post-COVID-19 economy and ensure their transition to a better normal”, as hundreds of these restaurants have ceased operations, all as a result of the imposition of community quarantines meant to curb the spread of the virus.

“It has been a challenge for restaurant owners and operators to sustain their businesses, sacrificing sales revenue, balancing their remaining cash flows to cover rental and other fees, taxes, while ensuring that they can still provide daily wages to their employees,” she said, noting first-hand her own experiences in dealing with restaurant owners and workers.

Quoting from data released by the Department of Labor and Employment (DOLE), the former senator, now Lone District of Antique Representative, said the first nine days of August alone were met with the retrenchment of 16,134 workers from 944 establishments after they downsized or ceased operations.

Despite the relaxation of quarantine rules, she added that majority of these restaurants suffered from foregone dine-in sales and the new complex requirements of supply chains thus resulting in closures and unprecedented mass lay-offs.

Legarda said the proposed law seeks the creation of a P30-billion fund to be sourced from programs and projects under the General Appropriations Act for Fiscal Years 2019 and 2020 which have been withheld, suspended, or otherwise not implemented due to the imposition of community quarantines.

Under the bill, restaurants can loan additional capital from the P30-billion fund to serve as a bridge fund which would allow them to sustain their operations and stay afloat until the pandemic shall have been over, or possibly past 2020.

On top of the fund, the bill likewise seeks to provide tax incentives and rent-extension payments to restaurants in distress, under a set of guidelines to be provided by the Department of Trade and Industry (DTI), to help the restaurant industry cope with the economic crisis brought by the pandemic.

Among these incentives are:

1. that all local government fees and charges shall not be due and demandable within the year 2020 and that only 50 percent of what would have been assessed during the year will be chargeable to succeeding years in a restaurant-owner proposed payment scheme approved by the local government of the area where the establishment is located: Provided, that the local government may check the financial status of the restaurant in determining whether the proposal has merit;

2. commercial spaces where the restaurants are established, upon a showing that the tenant has endeavored to stay open and retain at least % of their staff, shall not be taxed for the year 2020 for rentals paid;

3. that for restaurants paying percentage taxes on their income, the 20-percent burden from senior citizen and PWD discounts borne by the restaurants shall be counted as deductions in the computation of the income taxes, and for those paying value added tax (VAT), such burden shall be counted as input VAT;

4. that for restaurants with mandated payments to the government or to government-owned and -controlled corporations (GOCCs) such as taxes, employee insurance and benefits, permit fees and the like, the owners may propose a reasonable payment plan that is spread out over 24 months, and the government entity or GOCC shall, upon a finding that denial will cause the closure of the restaurant within 2020 or 2021, grant the request or negotiate for reasonable terms of payment with the objective of letting the business recover their investments as well as overcome the economic hardship caused by the pandemic; and,

5. that no government agency, local government unit or GOCC shall apply any penalties for failure to pay any of the fees enumerated.

Since the imposition of enhanced community quarantine in March this year}, the pandemic has left 157,705 workers from 7,759 affected businesses unemployed, almost 48 percent of which are from Metro Manila. Calabarzon followed suit with close to 21 percent of the displaced workers while Central Luzon had 11 percent. At this rate, an average of 1,792 workers are being laid off daily, surpassing the highest number of employee dismissal recorded last June at 1,686.

In all, Legarda said the bill seeks to provide economic measures to the restaurant industry to ensure that they are able to provide jobs, prevent their closure through the creation of payment extensions and bridge funding, assist them in the transition to a better normal that would reduce food wastage, sustain biodiverse agriculture and prevent the spread of diseases in their business establishments.***