MEMBERS of the business sector in Davao City foresee changes in the city's business climate that may take effect following the implementation of the 10 percent increase in business tax rate.
Last year, the Davao City council approved the 10 percent increase in business tax rate based on the amended local revenue code. In a statement released by the City Information Office (CIO), restaurants, cafes, and carenderias pay only P1,261.25 based on their provision of less than P50,000 annual gross income. For 12 years now, this is the same amount the small establishments pay as tax. With the increased business tax, they will now be collected with P1,497.38.
"For those with annual gross income of P200,000 to P250,000, the city would now collect from them P3,226.47, while for those with annual gross income of P1 million to P2 million, the city has started collecting P9,160.31 as business tax," read CIO's press release.
Pilipino Banana Growers and Exporters Association (PBGEA) executive director Stephen Antig foresees the negative effect this business tax increase will have for the business climate in Davao City.
"It will definitely dampen business enthusiasm and might slow down investment. That is the usual effects of increasing taxes," Antig said.
Mary Ann Montemayor, owner and founder of Villa Margarita Hotel and social enterprise KAAYO Modern Mindanao said the business tax increase will surely have an effect on prices of commodities and services however it will also serve as a challenge to the Micro, Small, and Medium Enterprises (MSMEs) to be more creative in sustaining their business.
Davao City Chamber of Commerce and Industry (DCCCII) chairman Antonio dela Cruz said there should be not much fear when it comes to the increase in retail prices of the commodities as the Department of Trade and Industry (DTI) does regular monitoring of the goods' prices.
"As a businessman, [it is okay] as long as these taxes are properly collected and used according to its purpose like infrastructure...If all these taxes are collected and used accordingly for the good of Davao, maybe we should be grateful even because we have a local government that looks into the welfare of the Dabawenyos," he added also pointing out that before such laws are approved, they had been thoroughly studied first.
He said the increase for the retail price for some commodities had actually already taken effect on January 1, 2018 following the implementation of the Tax Reform for Acceleration and Inclusion (Train) Law. He said as a means to further promote Davao City especially to foreign investors, he always state that "all roads now go to Davao now".
"People will really invest in any point in Davao and besides, there are even Chinese investors coming in, I think, by March. We have visitors from Shanghai. There will be agreements to decide on. And again, some others from Malaysia and Indonesia. And I think, in due time even the Russians will come and invest in Davao," dela Cruz said when asked if he thinks the attraction of the investors in Davao City will change with the increased business tax.
"We at the Davao Chamber are still studying the impact of the increase in business taxes vis-à-vis with other key cities like Panabo, Cagayan de Oro, General Santos, Bacolod, Iloilo, Cebu, Taguig, and Makati," DCCCII president Arturo Milan said.
In the statement by CIO, Tax Research and Action Team (TRACT) head Erwin Alparaque said the increase is expected to boost tax collection, thus increasing as well the city's annual budget for 2019.