A 167-percent increase in local taxes may likely strangle to death small and medium enterprises in Quezon City.
Members of over 62,000 registered business firms in Quezon City on Wednesday aired their fears over possible collapse of the city’s trade and commerce as establishments balked at the reported 167 percent increase in business tax imposed by the city government.
In a forum, Carl Balita president of the Philippine Chamber of Commerce and Industry (PCCI) Quezon City chapter revealed that some establishments from the micro-business sector are planning to relocate their businesses in Marikina and San Juan where business taxes are relatively lower.
If the city government won’t heed the businessmen’s appeal, Balita said that companies mostly from the small-scale sector might not have any option but to pass on the tax burden to consumers.
Instead of improving the business competitiveness in the city, Balita said that the unjust increase in business taxes would result in the slow death of Quezon City’s business sector.
The Quezon City government computes business tax collection of business firms based on the gross income and not on profit.
With the expected demise of trade and commerce in the city stemming from the exorbitant business tax, Balita said that this will have a chain effect since these will cause insurmountable job loss and shortfall of the firms’ contribution in the local government’s coffers.
Balita also lashed out the city government for imposing the presumptive income scheme where the recorded highest base income of a firm is used as yardstick in the computation of their business taxes.
Many establishments in the micro-business group comprising 97 percent of the city’s business firms might be forced to close shop if the new business tax rate is imposed.
Citing as an example, Balita said that a small-scale business firm paid only P12,000 business tax in 2013 but was astonished that he was assessed P49,000 the following year.
Had the base income increased by 100 percent, the businessman who owns the firm said he should be assessed only P25,000 instead of P49,000 in business tax.
“For every P1-million earned the firm has to pay P50,000 in business tax. Assuming the income is P100 million then the business tax will amount to P500,000,” the business firm owner said.
Balita also questioned the manner by which the ordinance was approved and carried out citing that from the second reading on December 16, 2013 it was approved on December 20, 2013 and published on the national dailies on December 27 until the new business tax rate was imposed this year.
Lawyer Giovanni Melgar a board member of the PCCI said the group would resort to legal remedies should the Quezon City government insist on its current rate of .75 percent based on gross.
He said that businessmen can file their case with the local court or with the Department of Justice where the new business tax rate may be invalidated should they find merit with the complaint.