Business group calls for better public service with higher tax in Cebu City

Cebu Business Club president Joseph points out Cebu City’s shortcomings in improving lot of residents

Besides profit, tax adjustments matter most to businesses in Cebu.

Cebu Business Club president Gordon Alan Joseph said he would not mind increased taxes if the city is able to deliver the services that enable business competitiveness and improve quality of life in the city.

Cebu City Councilor Margarita Osmeña and Councilor Alvin Arcilla drafted an ordinance that would impose a uniform tax rate of 1.5 percent for all businesses, except for exporters of essential commodities.

Joseph pointed out that Cebu City seems incapable of solving problems and is unable to transform the city into a world-class, livable place to work and live.

“We are mired in traffic, garbage, peace and order problems, illegal settlers, flooding, etc. It’s all talk and posturing. No action. It’s sad,” said Joseph.

Taxes are the lifeblood of the economy. It is used to fund infrastructure projects and other basic social services like education and healthcare.

Filipino-Cebuano Business Club Inc. president Rey Calooy said any tax-related issue worries micro-, small and medium enterprises (MSMEs) as any adjustment could impact consumer spending activity.

“We don’t know yet if it is favorable to us. As of now, we can’t say whether we oppose or support,” said Calooy. He said their organization is interested to attend the public hearings on the proposed business tax adjustment.

“If it will not be a win-win situation, then we will air our concern,” he said.

Calooy said said any tax hike may discourage business expansion, affecting the potential growth of the MSME sector.

“Survival baya ang business, so either they stop expanding, add on the cost to consumers or relocate to other cities that collect low taxes,” he said. “But, at the end of the day, it will be the consumers who will have to shoulder these costs especially for unregulated products.”

Calooy said government’s strategy should be to lower taxes to attract and build investor base.

“If there would be more investors, that would mean more jobs will be generated, thus purchasing power will improve. It will redound to the growth of MSMEs, so there’s a vibrant economic activity,” he explained.

Calooy said offering lower taxes may also encourage Cebu-based businesses that are now in Manila to relocate here.

The Cebu Chamber of Commerce and Industry (CCCI) said it is now crafting their position paper on the proposed business tax adjustment. It intends to release it in the coming days.

In earlier interviews, CCCI president Antonio Chiu vowed to help the business community raise its concerns on the high cost of doing business, infrastructure, and the ease of doing business.

“Investors would love to diversify and expand their businesses, but what hampers them are the existing policies, which are no longer applicable at these times,” Chiu said.

He is referring to the single-category business tax implemented by the local government units. He said it has become a burden to small and medium enterprises (SMEs).

Chiu said that unlike Cebu City, which observes graduated business tax rates, those in the countryside only observe one category of business tax, regardless of how high the gross sales is.

“If you have high gross sales, the tax rate should be reduced,” said Chiu.

Cebu City remains in the ninth spot in the Cities and Municipalities Competitiveness Index 2018 recently released by the National Competitive Council (NCC) Philippines.

Cebu City has improved its ranking in economic dynamism, placing 6th place from 10th place last year. Economic dynamism is associated with activities that create a stable expansion of business and industries and higher employment.

In terms of government efficiency, Cebu City did not earn a place this year. Last year, it was 95th.

Government efficiency refers to the quality and reliability of government services and “government support for effective and sustainable productive expansion.”

This key indicator looks at issues like corruption, protection and enforcement of contracts, taxation, and regulation. KOC

Reaction

“Good and reasonable.” This was how Cebu City Councilor Margarita Osmeña, meanwhile, described Joseph’s reaction on the proposed tax amendment under the City Omnibus Tax Ordinance.

“I think that’s a very fair comment. I’m very glad to hear that and that’s exactly what it’s for right? To provide better services to the residents of Cebu City,” Osmeña said.

Osmeña, who heads the City Council committee on budget and finance, said the proposed amendment is in compliance with the recommendation of the Commission on Audit’s (COA) who said that the City lost some P1.6 billion in potential revenue due to the outdated tax ordinance.

The P1.6 billion represents a potential increase in collection of 10 percent from all local taxes, which COA said could have financed more valuable projects.

Section 59 of Chapter XVII provides that no person shall engage in or operate certain types of businesses without first paying the corresponding graduated tax indicated for each kind of business.

But with the proposed flat rate, Osmeña and Arcilla said this will make a taxpayer having the capacity to gain more income pay higher taxes compared to those taxpayers who earn less.

Osmeña said the draft measure has the support of Mayor Tomas Osmeña.

“It (1.5 percent flat rate) was just a suggestion made, but again everything is up for study and for comments by all stakeholders. I think it’s a fair percentage as explained because what’s happening now, sometimes it’s the smaller ones who are paying more. You know, to make it more equitable,” Councilor Osmeña said.

We are mired in traffic, garbage, peace and order problems, illegal settlers, flooding, etc. It’s all talk and posturing. No action. It’s sad. GORDON ALAN JOSEPH

Cebu Business Club president