CCCI bucks Cebu City’s pro­posed new busi­ness tax scheme

Cebu Daily News - - ENTERPRISE - By Jose Santino S. Bu­na­chita RE­PORTER

Im­pos­ing a flat rate of 1.5 per­cent on busi­ness taxes in Cebu City may hin­der in­vest­ments com­ing into the city.

The Cebu Cham­ber of Com­merce and In­dus­try (CCCI) be­lieved that while there is a need to ad­just the city’s out­dated tax scheme, it should not be “ex­ces­sive.”

“It is high time Cebu City makes ad­just­ments in taxes. It’s been more than 20 years that there were no ad­just­ments. They were even crit­i­cized by the COA (Com­mis­sion on Au­dit) for that,” said CCCI Pres­i­dent An­to­nio Chiu.

“But mov­ing it to a flat rate of 1.5 per­cent will dis­cour­age big busi­ness- es from lo­cat­ing to Cebu City,” he added.

Ac­cord­ing to Chiu, the cur­rent busi­ness tax scheme in Cebu City is grad­u­ated, whereby busi­nesses with higher gross sales pay­ing their obli­ga­tions at a lower tax rate.

The CCCI has for­mally sub­mit­ted their po­si­tion pa­per last Tues­day to the Cebu City Coun­cil on the lat­ter’s pro­posed amenda­tory or­di­nance to im­pose a flat rate or 1.5 per­cent as lo­cal busi­ness tax in the city.

The pro­posed or­di­nance by Coun­cilors Mar­garita Os­meña and Alvin Ar­cilla sought to amend the city’s Re­vised Om­nibus Tax Or­di­nance.

But ac­cord­ing to Chiu, the city gov­ern­ment could still in­crease its tax col­lec­tion with­out be­ing “ex­ces­sive.”

The CCCI also be­lieved that this pro­posed rate will be dis­ad­van­ta­geous for mi­cro, small, and medium en­ter­prises (MSMEs), which com­prise ma­jor­ity of the busi­nesses op­er­at­ing in the city.

“TheCham­ber­firmlyan­tic­i­pates the nega­tive im­pact in im­pos­ing a flat LBT (lo­cal busi­ness tax) rate of 1.5 per­cent, which would make Cebu City not com­pet­i­tive and con­ducive for busi­ness and in­vestors spe­cially to the MSMEs in­clud­ing the Barangay Mi­cro Based En­ter­prises (BMBEs),” the CCCI said in its po­si­tion pa­per.

The cham­ber pro­posed that the City should have a grad­u­ated scheme based on gross sales in ac­cor­dance with that the pro­vi­sion of the Lo­cal Gov­ern­ment Code. This way, big busi­nesses will be en­cour­aged to re­main in the city, it added.

The CCCI also pointed out that other neigh­bor­ing cities have main­tained low tax rates.

In Man­daue City, the 1999 rev­enue code of the city im­poses a grad­u­ated tax rate be­tween 30 to 50 per­cent of one per­cent on the gross re­ceipts of some spe­cific in­dus­tries. In 2006, all tax clas­si­fi­ca­tions un­der the city's or­di­nance were raised by 10 per­cent.

In Tal­isay City, its 2011 Rev­enue Code levied grad­u­ated tax rates of 0.5 per­cent for those with gross sales of P6.5 mil­lion or more.

Lastly, the CCCI pointed out that the 2007 Rev- enue Code of Lapu-Lapu City also pre­scribed for grad­u­ated tax rates for man­u­fac­tur­ers with gross sales of P20 mil­lion or more at only P66,500 plus 0.5 per­cent in ex­cess of P20 mil­lion

“We also en­cour­age the City to im­pose a spe­cial and low LBT rates to MSMEs in­clud­ing the BMBEs to ac­cel­er­ate the growth of our small and new en­trepreneurs and strengthen their re­spec­tive busi­nesses,” the CCCI added.

The CCCI also lamented that busi­nesses also have to con­tend with other prob­lems, in­clud­ing in­creas­ing costs of elec­tric­ity, in­creas­ing costs of la­bor law com­pli­ance, and prob­lems on ease of do­ing busi­ness, among oth­ers.

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