Tax hike on construction materials ill-timed – CCCI

CEBU, Philippines —  The Cebu Chamber of Commerce and Industry has expressed concerns on the timing of the proposed amendments to the Revenue Code of Cebu Province that seek to increase the taxes and fees on industrial construction and housing materials.

CCCI president Felix Taguiam, in a five-page position paper, said it is not the best time to impose such increase because Cebu is still in the middle of the COVID-19 pandemic.

CCCI described the proposal to be “anti-competitive” and one that “gives undue favor and advantage to entities engaged in the importation of cement products and its derivatives from China and Vietnam, thus killing the local cement industry that invested billions in Cebu Province.”

Specifically, the business chamber cited Section 124 of the proposed measure that seeks to impose tax on ordinary stones, sand, gravel, and other quarry, not only those extracted on public lands but also those processed within the province.

The chamber said this will increase the cost of construction and housing materials as the tax is imposed on basic raw materials of cement and aggregates of concrete.

“This increase in cost will ultimately be borne by the business or individual consumers and discourages the Build, Build, Build program of the government,” it said.

CCCI also noted that under Section 125, a monitoring fee (instead of a fixed fee) of 10 percent of the local fair market value per cubic meter on ordinary stones, sand, gravel, earth and other quarry resources extracted on private lands, as well as non-metallic mineral commodity on all lands.

Such monitoring fee, it said, will have an adverse effect on Cebu’s and the country’s economy and runs counter to the government’s economic policy.

Also, the chamber said that the imposition would prohibit trade and affect heavily on the stakeholder’s results of operations and financial standing, and would eventually result in incurring losses.

Section 220 also seeks to impose a fee of P12 and P25 based on the volume of extraction in cubic meters for ordinary stones, sand, gravel, earth and other quarry resources and in metric tons for non-metallic minerals, respectively.

This, according to CCCI, will be unattractive to investors as it will increase the cost of doing business here.

CCCI, for example, said that for a company that produces 1,200,001 to 1,600,000 cubic meters of limestones (considered as quarry resources under the proposed measure) the computation of the additional cost, due to Section 125 and 220 would be for Extraction Monitoring Fee from the current P1.5 million this will increase to P78 million.

Its environmental enhancement fee will skyrocket from P250,000 to P19.2 million.

These figures, CCCI said, are in addition to the charge of 10 percent on the local fair market value per cubic meter imposed on extracted and/or processed ordinary stones, sand, gravel, earth and other quarry resources.

Aside from increasing unemployment, the proposed taxes and fees, the CCCI said, will also increase the cost of raw materials by more than 54 times the present cost.

“Such increase in cost will certainly be passed on the end consumers, and thus will unreasonably burden the real estate industry and various stakeholders,” the position paper read, adding that “the province should be helping the industry bounce back from the economic meltdown.” — JMD (FREEMAN)