Businessmen protest QC tax hike

MANILA, Philippines - The Quezon City chapter of the Philippine Chamber of Commerce and Industry (PCCI) has warned of business shutdown in the city following the implementation of a 10 percent increase in business taxes.

But local government officials remain confident that the city’s economy will continue to improve despite the tax hike, which was described as long overdue since the last increase was approved in 2001.

Carl Balita, PCCI Quezon City chapter president, said some establishments in the city are thinking of relocating their businesses in nearby cities where taxes are relatively lower.

He warned that businesses in the city may have no choice but to pass on to consumers the additional taxes, or face possible closure that could result in loss of jobs.

Balita described the tax hike as “oppressive and excessive,” adding they were surprised of its immediate implementation just weeks after Mayor Herbert Bautista signed the measure into law last December.

He said they were not informed of the public hearings, which were held in November while the ordinance – which amended the business tax schedule in the city’s revenue code – was still pending before the city council.

The PCCI called for the suspension of the tax hike.

Balita said the tax increase should be implemented on a staggered basis to cushion its effect on businesses.

Lawyer Giovanni Melgar, a board member of the PCCI, said the group would resort to legal remedies should the Quezon City government continue implementing the tax hike.

He said they can file a case with the local court or with the Department of Justice to invalidate the measure.

Open to negotiation

In an interview with The STAR, first district councilor Victor Ferrer – the author of the ordinance – said he is open to filing another measure that will revise the implementation of the tax increase.

Ferrer said he is coordinating with business groups and is currently reviewing their proposal for a staggered tax hike. He added that a notice was published in national newspapers regarding the ordinance.

Garry Domingo, head of the city’s business permits and licensing office, said they could not stop the implementation of the higher business tax rates as their office is mandated by the approved ordinance.

City administrator Aldrin Cuña, meanwhile, said they would review the proposal for a staggered tax hike.

He said businessmen are open to exhausting all efforts to stop the tax increase.

He expressed hope it would not result in closure of establishments in the city.

COA recommendation

According to Cuña, the business tax increase is in compliance with the Commission on Audit (COA) recommendation to come up with possible amendments to the revenue code without going beyond the provision of the Local Government Code (LGC).

The LGC allows local government units to adjust tax rates not more than once every five years. The last increase was in 2001.

City treasurer Edgar Villanueva said the business tax hike would augment the needs of the growing population of Quezon City.

Ferrer seconded the city treasurer, noting the need for additional school buildings in time for the implementation of the K-12 program in 2016.

P500 M additional revenue

Villanueva told The STAR that the higher business taxes would result in additional P200 to P500 million revenue for the local government.

He said the average tax collection from over 60,000 businesses in the city is around P6.7 billion every year. The total revenue collection of the city last year – which included business and real property taxes, among others – was over P12 billion.

“It will be used for the projects such as the construction of school buildings and health centers,” said Villanueva.

Taxes even for pay toilets

In its report, COA recommended to the city government to “gather information on the new and emerging businesses, profession or occupation” for the possible updating of the revenue code.

True to the recommendation, the city included a host of new taxable businesses – including mall owners maintaining toilets or comfort rooms – in the amended revenue code.

In addition to this, the list of “other businesses” that were not specified in the code include owners of IT-related services, providers of seminars, proprietors of funeral parlors, mall owners maintaining pay parking spaces and organizers of food bazaars.

These will be taxed at a rate of two percent of the gross sales or receipts.

The tax hike also affected manufacturers, retailers, restaurant owners, banks, car dealers and other businesses in the city.

For instance, manufacturers with less than P10,000 sales in the preceding year will have to pay P269.50 annual tax instead of the previous P245.

On the other hand, manufacturers with P5 million to less than P6 million sales will have to pay P40,126 annual tax instead of the previous P36,500.

Those with more than P6 million sales will have to pay 55 percent of the one percent of total sales, up from the current 50 percent of the one percent of sales.

In case of restaurants and other similar establishments, owners will be taxed with 1.925 percent of gross receipt sales, up from the current 1.75 percent.