Raising taxes: A tale of 2 cities-A A +A
Sunday, October 13, 2013
TALISAY City Mayor Johnny V. de los Reyes plans to increase the city’s business tax penalties from P250 to P5,000.
In Lapu-Lapu City, the City Government has started to collect occupational taxes from workers at the Mactan Export Processing Zone (Mepz).
Local governments get a share of the Internal Revenue Allotment every year, but must collect local taxes or run economic enterprises to make enough to pay for services and projects.
Mayor de los Reyes, and his son, Talisay City Administrator John Yre de los Reyes, said the City needs to increase tax penalties to deal with constituents who refuse to pay their obligations fully.
While he supports the proposal, Talisay City Vice Mayor Romeo Villarante said that increasing the business tax penalties to P5,000 might drive away business owners.
Before the measure can be implemented, it must go through the Talisay City Council.
The Talisay City administrator, in an earlier interview, lamented that some businesses in the city are not complying with their obligations, because the penalty of P250 is not a deterrent.
John Yre said that some business owners do pay their business taxes but refuse to comply with other requirements such as sanitary, health and fire safety clearances.
The city administrator said he plans to convince the Talisay City Council to amend the Local Revenue Code in order for the new penalty rates to be implemented immediately.
With stiffer penalties, the City Government may increase its revenues.
The mayor said it’s high time the City increased tax penalties to avoid being left behind by more progressive local government units like Balamban town in the third district and Mandaue City in the sixth district of the province.
The idea of increasing Talisay City’s tax penalties came after officials met for their annual Executive and Legislative Agenda in Lapu-Lapu City a few weeks ago.
Aside from the proposed tax penalty increase, city officials have also agreed to come up with a city-wide computerization program that will make the tax collection operations more efficient.
More than 2,000 businesses currently operate in Talisay City.
Villarante said he agrees with the idea of increasing the business tax penalties, but further study is needed in setting the correct amounts.
Villarante told Sun.Star Cebu yesterday that while bigger businesses can afford to pay it, the proposed P5,000 business tax penalty could be too stiff for smaller businesses.
The penalties, he added, may be classified in terms of the type of business and its size.
The proposal has yet to be tackled by the City Council. Villarante, however, agreed that the City needs to improve its tax collection operations.
In another interview, Talisay City Treasurer Emma Macuto said that while the Local Revenue Code was revised last 2011, the City Council can pass an ordinance amending penalties for delinquent business taxpayers.
Macuto observed that majority of businesses in the city that don’t often comply with their requirements are smaller businesses such as those in the Tabunok Public Market.
She assured, however, that for this year, her office is expected to reach the City’s tax collection target of P200 million.
In Lapu-Lapu City, at least P5 million will be added to the City’s revenues every year once all workers pay the P100 tax, which is collected once a year.
The City was not able to collect occupational taxes from Mepz workers in previous years after the Philippine Economic Zone Authority (Peza) questioned the City’s right to do so.
Peza, an attached agency of the Department of Trade and Industry, is tasked to promote investments, extend assistance, register, grant incentives to and facilitate the business operations of investors in export-oriented manufacturing and service facilities inside Special Economic Zones.
Late last year, Mayor Paz Radaza said, the City and Peza reached a compromise.
Under the agreement, the City can collect business permit fees and occupational taxes from all Mepz companies except those engaged in import and export businesses.
However, companies that are exempted should pay the P5,000 community assistance fee every year.
Radaza, in a press conference last Wednesday, said collecting occupational taxes from all workers in the city is provided under the City’s revised Revenue Code.
She said workers outside the Mepz have been paying the tax every year.
“Workers in Lapu-Lapu are able to enjoy services from the City like free hospital services and better roads, so it’s only proper that we collect taxes from them,” she said.
Workers should pay the tax before the year ends.
Radaza said it took the City and the Mepz three years to resolve the matter.
The mayor tasked City Legal Officer Yuri Benluan to help explain to Mepz workers why the City collects occupational taxes.
Published in the Sun.Star Cebu newspaper on October 14, 2013.