Councilor proposes measure to raise taxes on banks, financial firms
A Cebu City Councilor is proposing a measure seeking to increase the business tax rates on banks and other financial institutions in the city.
City Councilor Raymond Alvin Garcia, the author of the ordinance amending the city's Omnibus Local Tax Ordinance, wanted to increase from 50 percent to 75 percent of the one percent of the gross annual receipts of the banks and other financial institutions.
During the public hearing yesterday, Cebu Bankers Club President Mario Fritz Palileo read the club's position paper opposing the proposed measure.
“Increase in taxation will increase total expenses for the banks. Banks expenses have increased these past few years due to capital expenditures which are aimed at increasing the safety and efficiency of the bank's delivery of services and operations,” he said.
While CBC recognizes the city's authority to levy taxes, Palileo cited Section 51 of the Local Government Code which provides that the city may exceed the maximum rates allowed for the province or municipality by not more than 50 percent except the rates of professional and amusement taxes.
Garcia, in his proposed ordinance, said Section 143 of the Local Government Code states that the maximum business tax rate that may be imposed by a city is 75 percent of one percent of gross receipts of the preceding calendar year derived from interest, commissions and discounts from lending activities, income from financial leasing, insurance of premium of banks, and other financial institutions.
Garcia said the 50 percent of one percent gross annual receipts of banks and other financial institutions is applicable mainly to municipalities and not to cities like Cebu City which is highly urbanized.
Palileo said the banks are currently implementing various projects like the Check Image Clearing System or Philippine Clearing House Corporation has implemented the system upgrade to shorten the clearing period of checks.
He said there are also banks that are switching to Euro-Pay Mastercard Visa for Automated Teller Machines due to recent events of ATM card fraud in the country.
“Banko Sentral ng Pilipinas has recently obligated all banks to convert to the EMV technology free of charge to all bank clients,” he said.
Under the proposed ordinance, Garcia put a clarification on the items covered by gross annual receipts since there is an ongoing legal action between the city and a leading bank on local business taxes on banks.
The imposition of items covered by the gross annual receipts of banks and other financial institutions will avoid the confusion in city's collection of business taxes and will pave the way to guide the banks and other financial institutions in the payment of the taxes, he said.
Garcia said the gross receipts for the preceding calendar year as applied to banks and other financial institutions shall be limited only to those derived from interest, commissions and discounts from lending activities, income from financial leasing, dividends, rentals on property and profit from exchange or sale of property, insurance premiums.
“Ang nahitabo man gud karon, I may be wrong, but ang mga banks karon nga individual branches sila man gud ang magbuot unsay ilang i-declare,” he said.
Meanwhile, City Budget Officer Marietta Gumia said the office will support the passage of the ordinance as the measure will increase the city's income to support its programs, projects, and activities of the city government.
A vessel, a general cargo carrier, catches fire while on anchorage at Porter's Marina in Barangay Caledo in Liloan town, about 500 meters away from the shoreline. As of 8 p.m. last night, firemen and responding personnel from the Coast Guard Station Cebu have still to totally put it out. Story on page 8