Cebu City’s proposed tax exemption: A duplication
FULL DISCLOSURE - Fidel Abalos (The Freeman) - September 9, 2019 - 12:00am

Recently, Councilor Eugenio Gabuya Jr. said that the City of Cebu may soon exempt all small and home-based businesses from paying business taxes if his proposed measure in this respect will be approved by the council and Mayor Edgar Labella. He further said that entrepreneurs who shall be exempted are those with a P10,000 start-up capital or businesses whose gross receipts will not exceed P50,000.

Honestly, this is a breath of fresh air. It is a laudable development because this initiative comes from the local government unit (LGU). A rarity. Why? It is because, in the past, initiatives similar to this proposed measure that emanate from the national government never got the support of the LGUs.

To recall, then President Gloria Macapagal-Arroyo signed into law Republic Act 9178 or the Barangay Micro Business Enterprises (BMBEs) law on November 13, 2002 to encourage the formation and growth of BMBEs by granting them incentives and other benefits.

It is passed to hasten the country’s economic development by encouraging the establishment and growth of BMBEs. As the barangays are considered the source of entrepreneurial talents, it envisioned an integration of those in the informal sector or in the underground economy with the mainstream. By granting incentives and benefits to these BMBEs, they are supposed to sprout all over the country. Consequently, they will be able to generate employment and alleviate poverty.

Unfortunately, however, this law has remained seemingly dormant because of some local government executives’ indifference. We can only surmise why local politicians are reluctant in supporting them.

First, they don’t want to implement programs where they cannot affix their oversized and enhanced photos on tarpaulins for advertising mileage.

Secondly, they don’t seriously consider programs that shall truly emancipate the poor from the bondage of poverty. They are leaning largely toward programs (like dole-outs) that shall truly make the majority of our countrymen their perennial parasites. These are unequivocal parasites who are willing and blindly ready to die for them as they continue to satisfy their unquenchable thirst for power and perpetual hold of their respective turfs.

These reasons make this fresh initiative of Cebu City really laudable. Apparently, however, there is a bit of duplication here. As explained above, we already have the BMBE law.  This is a law that gives so much incentives to would be entrepreneurs. These incentives include, among others, income tax exemption from income arising from the operations of the enterprise; exemption from the coverage of the Minimum Wage Law; priority to a special credit window set up specifically for the financing of BMBEs; and technology transfer, production and management training, and marketing assistance programs for BMBE beneficiaries.

More importantly, on top of these, the law also enjoined LGUs to reduce the amount of local taxes, fees, and charges imposed or exempt the BMBEs from local taxes, fees, and charges. That’s why we say, this proposed measure of Cebu City is a duplication.

Moreover, the scope of Cebu City’s proposed measure deals only with exemption from local business taxes.  On the other hand, the BMBE law exempts the entrepreneur of income taxes, offers the same incentives for local business taxes and a lot more.

We also have to remember that Negosyo Serbisyo sa Barangay (NSB) program is now in place.  As envisioned, it shall conduct information campaigns on the Go Negosyo Act, Business Name Law, financial literacy and Pondo sa Pagbabago at Pag-asenso (P3). Also, it continues to offer, among others, entrepreneurship seminar, bookkeeping/accounting for non-accountants, product development and related skills training.

Since the NSB platform will bring in the system of Negosyo Centers down to the barangay level, as envisioned, those who have started or will start their small businesses can easily get their pre-requisite requirements like business permit, business name, among others without having to go to the City or their respective towns.

Indeed, the best thing that the LGUs will do is to work harmoniously with the national government. In fact, the only thing that they should do is to support these existing programs or initiatives.

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