Exec objects to proposed hike on bank business tax

CEBU, Philippines — Cebu City Councilor Raymond Garcia wants to increase the business tax rate imposed on banks and financial institutions but an official of a bank group said this will be counter-productive.

Garcia’s proposed ordinance amending Sections 46 and 48 of Cebu City Omnibus Tax Ordinance No. LXIX, as amended, to increase the business tax rate imposed on banks and other financial institutions and to define the scope of “gross receipts” of  the same institutions went through a public hearing.

Garcia is proposing to increase the business tax rate from 50 percent of 1 percent, to 75 percent of 1 percent.

“The law allows us 75 percent of 1 percent to be charged to financial institution for business taxes. As of now, it is only 50 percent, so now we want to increase it to 75,” said Garcia.

Garcia also wants the gross receipts to be clearly defined, so that this will serve as a guide to financial institutions during the assessement of taxes to pay and to improve the collection of revenues.

“Mao na ang problema, kay vague kaayo ang definition sa gross receipts so karon ato na ni i-klaro. Some banks gamay ra kaayo ang taxes mabayran sa Cebu, kay kasagaran sa ilang income i-declare nila sa ila main office,” said Garcia.

“They should declare it here in Cebu City kay diri man sila based and tanan nila serbisyo gikan man diri Cebu City,” he added.

Neil Yu, president of Cebu Bankers Club, said that they would like to request for consideration on the proposed increase.

Yu said that the increase will be disadvantageous to the banks’ clientele since this may require a correponding increase in their service charges.

He also said that since last year, banks have been upgrading their system infrastructures and have been installing addition Automated Teller Machines (ATMs) for public convenience.

Yu, however, said that CBC supports the redefinition of the scope of gross receipts.

Juanita Paires, acting treasurer of Cebu City, said that for 2019, they were able to collect P133 million from the financial institutions alone, and more or less 50 percent of it came from the banks.

“It will have a big impact of the collection. For last year, we were able to collect 133 million, and we can generate more or less P36 million if we increase,” said Paires.

Paires said there are at least 1,800 establishments categorized as financial institutions in Cebu City, such as banks, insurance companies, and pawnshops, among others.

The City Council has requested a comparative analysis from the City Treasurer’s Office on the data from financial institutions.  JMD (FREEMAN)