The Baguio City Council, during its regular session last April 24, urged the City Treasury Office to restudy the latter’s proposal to increase business taxes in the city.
Vice Mayor Faustino Olowan told City Treasury Officer Alex Cabarrubias to consider the comments and suggestions of the members of the city council in refining the proposal before the same is presented to various sectors through a public consultation.
In his presentation to the city council, Cabarrubias explained that increasing the business taxes is in compliance with Section 191 of the Local Government Code which states that a local government unit has the authority to adjust the tax rates once every five years but shall not exceed 10% of the fixed rates. He said the tax rates had not been updated in the last 22 years.
To cope with the tax rate update, the proposed tax increase shall be 40% of the prescribed fixed rates under the Local Government Code of 1991 or Republic Act No. 7160.
Cabarrubias presented the tax rates of taxpayers in Fiscal Year 2019 (from the lowest to highest gross income) visavis the proposed 40% tax increase.
Under the tax table for manufacturers, the tax of those with the lowest gross income which is P6,050 will increase from P248.00 to P348 while the tax of those with the highest gross income will increase from P1,922,869.00 to P4,316,465.00.
The proposed 40% tax increase for retailers, boarding houses, services providers, food services, wholesalers, banks and financial institutions, amusement places, hotels, cable/television networks, cinemas or theaters, and other businesses was likewise presented.
The projected revenue of the city government from the overall total of the proposed tax increase based on the tax collection in Fiscal Year 2019 is P332,225,789.00.
Other reasons in updating the tax rates, according to Cabarrubias, are the following: implement the salary standardization in compliance with the Salary Standardization Law (Republic Act No. 11466); raise funds for the city’s operations and the 52 major development projects; and improve the rating of the city government on fiscal sustainability by the Bureau of Local Government Finance (BLGF).
Aside from the proposed tax increase, there will also be an increase in the Mayor’s Permit (from P100.00-P1,500 to P3,500); processing fee (P450-P1,500); additional mayor’s permit for warehouse (P0-P5,000), imported liquor (P200-P2,500), local liquor (P150-P1,000), ATM (P200-P1,000), bicycle/tricycle and boat (P20-P350); and storage fee for fuel/kerosene (P1,000-P10,000), cinematographic films (P500-P2,500), celluloids (P500-2,500), calcium carbide and tar/resin (P200-2,500), and rubber products and other flammable materials (P200-3,500).
Cabarrubias appealed to the city council for the approval of the said proposal. However, several members of the city council expressed reservations.
Councilor Vladimir Cayabas said it is “not the taxpayers’ fault” that the city government was not able to update its tax rates in the past 22 years.
For Councilors Arthur Allad-iw and Mylen Victoria Yaranon, it is better to have the tax rate adjusted at a later year as the business sector is still reeling from the effects of the COVID-19 pandemic.
Yaranon further claimed that the burden caused by the tax increase will consequently affect the consumers.
Councilors Benny Bomogao and Peter Fianza raised the issue on the legality of the proposed 40% tax increase, suggesting that the City Legal Office carefully study the proposal to make sure there won’t be any legal repercussions once implemented.
Councilor Betty Lourdes Tabanda claimed the proposed 40% tax increase is “oppressive.”
“While the 40% tax increase may be sanctioned, it is a basic law principle in taxation that taxes should not be oppressive,” Tabanda stated.
Councilors Jose Molintas and Elmer Datuin and Vice Mayor Faustino Olowan proposed a 20% tax increase, instead of 40%, then raise it gradually in the future.
The City Treasury Office was given 20 days to amend the proposal, taking into consideration the comments and suggestions of the members of the city council. After its revision, the proposal goes back to the city council for its approval on second reading.
As a matter of policy on local legislation, the city council must approve the proposal on second reading before a public consultation is conducted.**Jordan G. Habbiling
