Baguio’s LFC readies proposal to increase business tax rate

Following the increase on real property tax assessments, the Local Finance Committee of the city government of Baguio is now studying how to improve its business tax rate by at least 40 percent of the existing rate – either one time increase or gradually.

City Treasurer Alex Cabarrubias said the need to increase the city’s business tax rates is anchored on the mandate of local government units to implement the Salary Standardization Law.

Increase in business tax collection is also needed to raise funds for the city’s operations and for the implementation of the 51 priority development projects identified by the current administration.

Cabarrubias said the city has not revised its business tax rates for the last 22 years and income has stagnated. Under the local government code, LGUs are mandated to undertake a general revision of its business tax table every five years.

The city treasurer explained the city government will be able to correct its regressive tax table by increasing the rates up to 40 percent considering the 22 years of lapsed tax table.

“We are allowed to increase every 5 years on taxes but we did not, so for 22 years we should have increased four times at 10% each. Therefore, we can increase our tax table by 40% according to the local government code,” Cabarrubias explained.

He said the proposed increase was presented to the Bureau of Local Governance and Finance (BLGF) in 2019 but was overtaken by the Coronavirus disease pandemic.

The city’s failure to update its business tax table resulted in the city becoming dependent on its Internal Revenue Allotment (IRA) now called the National Tax Allotment (NTA) due to limited revenue generation.

Cabarrubias said implementation of the proposed increase on the business tax table and its scheme will require a legislative action subject to public consultation with the business sector. He hopes the needed ordinance for the business tax increase will be approved and ready for implementation by 2024. – JMPS