Saturday, October 13, 2007 Councilor plans scrapping of amusement tax
GOOD news for event organizers, entertainment spots and related establishments, if this gets approved.
For a healthier business environment, a Cebu City legislator asked that the 30 percent amusement tax on shows and concerts and “social amelioration tax” on entertainment spots and related establishments be scrapped.
Councilor Hilario Davide III said the 30 percent amusement tax has discouraged production outfits from organizing shows here, while cities in Metro Manila have already stopped asking for it to stimulate growth.
“It is believed that removing the amusement tax altogether will not only simplify our tax system…but will also boost tourism and encourage more local and foreign organizers, producers, or promoters to bring their shows to Cebu City,” he said.
This will give residents and visitors a wider array of shows and entertainment to choose from, Davide added.
Arguing that scrapping the tax does not affect the City’s coffers, he said that amusement tax revenue just composes six to seven percent of the total tax collection, and is therefore “not a significant source of revenue.”
In 2006, the City Government collected P46.2 million in amusement taxes. This represented about 5.2 percent of the City’s total tax income of P879.8 million. Davide proposed the scrapping of Sections 42, 43, 44 and 45 of Ordinance 69, or the Revised Omnibus Tax Ordinance.
Section 42 imposes a tax of 30 percent of gross receipts of places of amusement. Section 44 charges a tax of five to 10 percent if organizers donate a portion of the proceeds to a charitable institution or if the event involves Cebuanos or Cebu-based artists.
Davide also said that the ordinance has not clearly distinguished taxable concerts from those not subject to tax, that enforcement has become ineffective.
On the social amelioration tax, which is P1 for every customer or patron, he said it is not clearly recorded, so that collectors resort to “averaging” and, besides, collect only on Fridays and Saturdays.
The payments are intended for a social amelioration trust fund, which is neither clearly defined nor used, the councilor added.
This is unlike the P3 million a month the City receives from the Philippine Amusement and Gaming Corp. for its social amelioration projects and services.
He proposed the taxes’ abolition in relation to the City’s policy and continuing efforts to create an environment friendly to businesses.
“One way of doing this is to simplify, lower, and if practicable, eliminate some taxes imposed on businesses, (and) one tax that should be eliminated is the social amelioration tax,” he said.
His proposals were referred to the committee on laws, ordinances, public accountability and good government last Wednesday for its comments and recommendations. (RHM)
