QC businesses cry foul over 'excessive' tax hike

by Jon Carlos Rodriguez, ABS-CBNnews.com

Posted at Jan 29 2014 03:51 PM | Updated as of Jan 30 2014 07:28 PM

PCCI-QC president Carl Balita and director Atty. Giovanni Melgar

MANILA (UPDATE) – Businesses in Quezon City, led by the Philippine Chamber of Commerce and Industry-Quezon City (PCCI-QC), are calling for the deferment of a city ordinance amending the tax rates for businesses.

The PCCI-QC, Philippine Retailers Association, Philippine Franchise Association, and Philippine Amalgated Grocery and Supermarket Association are also asking the local government for a staggered increase of the tax rates.

“Kung talagang may pangangailangan itaas ang taxes, pwede naman, huwag lang biglaan. We are not against the taxes, we are against the manner of which it is being implemented,” PCCI-QC president Carl Balita told ABS-CBNnews.com on Wednesday.

Balita said the staggered increase will allow the business sector to gradually adjust the prices and costs of doing business.

“If from the prevailing 0.75 percent tax, an increase of 0.25 percent is imposed annually for 5 years, the 2 percent rate being imposed by the ordinance will be implemented in no time. Such gradual escalation will cushion the tax impact to our costs and prices enabling us to grow and be of more value to the city and the sectors we serve,” Balita said in a position paper.

He also that the business groups are calling for the elimination of the presumptive income because it has no “legal basis.”

He added that the PCCI-QC did not receive any invitation to public hearings on the ordinance, reportedly held in November.

PCCI-QC director Atty. Giovanni Melgar, meanwhile, said the groups will exhaust legal remedies to appeal for the suspension or amendment of the ordinance, which he described as “confiscatory, oppressive, unjust and excessive.”

“Kapag ang ordinansa ay ganoon, pwede nating i-validate ang ordinansa through filing cases in court, through a case filed before the Department of Justice. We are exhausting all remedies by having dialogues with our Quezon City officials,” said Melgar.

According to Balita, micro, small and medium enterprises (MSME) will be the most affected by the increased tax rates.

“May ibang sektor na 10 percent lang ang itinaas, pero kung papansinin natin, ‘yun ay 10 percent na pagtaas sa ibang sektor. Pero doon sa karamihan na nagbabayad ng 0.75, ngayon ay magbabayad ng 2 percent of the gross, hindi ‘yan 10 percent,” he said.

Balita said there are 62,679 registered businesses in the city, most of which are MSMEs.

Welcome Supermarket owner Steven Cua said that because of the new tax regulation of the local government, his tax of P58,000 last year will become P86,000 this year, apart from the other local fees and taxes which businesses in Quezon City have to pay.

Taxes of practically all businesses were increased, from manufacturers, wholesalers and retailers, banks, restaurants and even funeral parlors.

The local government of Quezon City insists that it's time that the local government raised taxes, since the last increase was in 2001.

They also maintained that cities and municipalities can increase taxes once every five years by up to 10 percent, according to the local government code.

The Quezon City government also said they are still open to dialogue though a bit tied to the ordinance which has already been passed and has to take effect this year.

Ordinance no. 2236 further amends the tax rate of certain items under Chapter 3 (tax on business) and Chapter 4 (other taxes) of the Quezon City Revenue Code in accordance with the limitations set forth in the local government code.

Under the ordinance, each local government shall exercise its power to create its own sources of revenue and to levy taxes, fees, and charges subject to the provisions; local government units shall have the authority to adjust the tax rates not more than often than once every 5 years, but in no case shall such adjustment exceed 10 percent of the rates; and rates of taxes that the city may levy 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.

The ordinance was passed by the city council on December 20, 2013. -- With a report from Adrian Ayalin, ABS-CBN News