BAGUIO CITY, Philippines – The Baguio City local finance committee is pushing for a 40% hike in business taxes prescribed under the Local Government Code of 1991 or Republic Act 7160, to take effect in 2024.

The new tax code, presented during the regular session last week by the City Treasurer’s Office (CTO), would replace City Tax Ordinance No. 2000-001 and see fees and taxes increased to compensate for 22 years of non-implementation of the authorized 10% tax increase every 5 years.

According to City Treasurer Alex Cabarrubias, under the tax table for manufacturers, the tax of those with the lowest gross income of P6,050 will increase from P248 to P348 while the tax of those with the highest gross income, which is P762,000, will increase from P1,922,869 to P4,316,465.

The new code would also hike the fees for the mayor’s permit from P100-P1,500 to P3,500, with similar increases for the processing fees and fees for additional mayor’s permit for warehouses, imported and local liquor, ATM, bicycle, tricycle and boat, storage for fuel and kerosene, cinematographic films, celluloid, calcium carbide and tar or resin, and rubber products and other flammable materials.

Cabarrubias added that the tax code would “straighten out” the current code, which has lower-income-bracket businesses paying a larger portion of their income than higher-tax-bracket establishments.

“The lower your tax bracket is, the higher you pay in certain segments of the Baguio tax table,” he said.

According to Cabarrubias, the current tax collections of the city are only 70% of its pre-pandemic figures, leaving the city heavily reliant on national tax allotments (NTA) from the national government to fund its development projects and operations costs.

However, while the government is pushing to revise the tax code, the City Council is not keen on the proposal. While acknowledging the need to update the tax code, multiple councilors have opposed the current structure of the tax overhaul.

Councilors Arthur Allad-iw and Mylen Victoria Yaranon want to move the tax code revision to “a later year” as establishments in the city are still recovering from the COVID-19 pandemic.

“While the 40% tax increase may be sanctioned, it is a basic law principle in taxation that taxes should not be oppressive,” Councilor Betty Tabanda said, with fellow council members Vladimir Cayabas, Benny Bomogao and Peter Fianza airing similar concerns.

Meanwhile, Vice Mayor Faustino Olowan and Councilors Jose Molintas and Elmer Datuin have instead proposed increasing the business tax by 20% by 2024, and further increase it gradually in the future, giving the office 20 days to amend the proposal for review.

Once amended with the input of the Council, the tax proposal will then have go through public consultation. – Rappler.com