Wednesday, October 17, 2007
Davide tells treasurer to scrap tax measure due to loophole
A LOOPHOLE plagues the Cebu City Government’s Omnibus Tax Ordinance, specifically on the collection of amusement tax, which event organizers, producers, promoters, and sponsors take advantage of that collection declined the past three years.
City Councilor Hilario Davide III cited this as reason why he suggested that the tax be instead scrapped to stimulate growth of the industry.
City Treasurer Tessie Camarillo hopes, though, that the City just decrease it instead of giving up the tax.
She said the move will still affect the City’s revenue despite composing just six to seven percent of total tax revenues.
“I just hope we can find another source of income to make up for the loss, if ever,” she said.
The proposed measure was referred to the committee on laws and the committee on budget and finance last week.
Recommendations
The committees are expected to give their recommendations today.
The City Government currently collects a 30 percent amusement tax, but exemptions were provided.
Arguing for the tax’s abolition, Davide said that “there seems to be an ineffective enforcement of the amusement tax, particularly on live performances such as concerts.”
Section 44 exempts from taxes operas, concerts, dramas, recitals, painting presentations.
“Pop, rock, or similar concerts,” upon the City Council’s approval, may be levied a reduced tax of only 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.
Section 140 (c), however, did not include “pop, rock, or similar concerts in the exemption.
Davide said that the ordinance has not clearly distinguished taxable concerts from those not subject to tax, so that enforcement has become ineffective.
Exemptions
He surmised that this could be because the law itself, particularly Sections 44 and 140, is “vague and imprecise.”
“(And) requests for either total exemption or a reduced tax rate are, more often than not, granted by the City Council,” he said.
In October last year, City Treasurer Tessie Camarillo requested that before the council approves applications for amusement tax exemptions, these should be referred to
her office for review.
She said tax exemptions were already hurting Cebu City’s revenue collections. She made the request after observing that the council regularly exempted entertainment
producers, promoters and organizers from paying amusement taxes.
Because of the successive approvals of requests for exemption, Camarillo worried that her office will not be able to collect that year’s projected income.
Collections
In 2004, the City collected P49.116 million, P45.889 million in 2005, and P46.201 million in 2006 in amusement tax.
For the first six months this year, the City collected P18.389 million.
The 2006 amusement tax collection represented about 5.2 percent of the City’s total tax income of P879.8 million.
Davide said that scrapping the tax does not affect the City’s coffers, as it is “not a significant source of revenue.”
Camarillo said, though, said that while amusement tax may just be six to seven percent of City revenue, the collection reaches several millions of pesos that could go a long way. (RHM)
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