Tax, yes, but not ‘excessive’
ALTHOUGH it understands that the Cebu City Government needs to increase its tax base, the Cebu Chamber of Commerce and Industry (CCCI) said any tax should not be “excessive.”
The CCCI expressed its opposition to a proposed amendatory ordinance that would impose a flat rate of 1.5 percent on business taxes through a position paper signed by CCCI president Antonio Chiu dated Nov. 12.
A copy of the position paper was presented to the City Council during a public hearing last Nov. 13.
The proposed amendment, filed by Councilors Alvin Arcilla and Margarita Osmeña, is in compliance with the recommendation of the Commission on Audit (COA) which said that the City Government lost some P1.6 billion in potential revenue due to the outdated tax ordinance.
In its review of the City’s financial transactions in 2017, the COA said the Revised Omnibus Tax Ordinance was enacted in 1994 yet and has not been updated.
The P1.6 billion represents a potential increase in collection of 10 percent from all local taxes, which the COA said could have financed more valuable projects.
“Since 1994, there was no update on the tax rates provided in the said revised tax ordinance. The tax rates could have been adjusted in 1999, 2004, 2009 and 2014 pursuant to Section 191 of Republic Act (RA) 7160, which provides authority to local government units to adjust rates of tax ordinances,” reads a portion of the COA report.
In its position paper, the CCCI cited two grounds as to why it is against the draft measure.
“By proposing to impose a flat rate of 1.5 percent, the SP (Sangguniang Panlungsod) could violate the provisions in law, especially so, that it intends to forego the graduation of rates in the Local Government Code. Also, upon our initial computations, the 1.5 percent flat rate exceeds the maximum amount of up to 50 percent increase in the rates that cities could levy.”
CCCI believes that having a uniform rate will be counterproductive, while a graduated scheme based on gross sales will encourage big businesses to remain in the city.
It added that rate in the draft legislation is “excessively high” for the business community given the effects of the TRAIN Law, increase in minimum wage and the current inflation rate.
“CCCI firmly anticipates the negative impact in imposing a flat rate of 1.5 percent on business taxes, which would make Cebu not competitive for business and investors,” wrote CCCI.
Councilor Osmeña, head of the committee on budget and finance, said they will consider the concerns raised by CCCI.
“We will consider it. The City Treasurer’s Office submitted the recommendation for a 1.5 percent adjustment. The graduated scheme worked for some and not for others, so we will look into it,” she said. RTF