THE Cebu Bankers Club (CBC) is opposing the proposed measure seeking to increase the business tax rates on banks and other financial institutions in the city.
CBC President Mario Fritz Palileo read the club’s position paper opposing the proposed measure during a public hearing last Tuesday.
“An increase in taxation will increase total expenses for the banks. Bank expenses have increased these past few years due to capital expenditures aimed at increasing the safety and efficiency of the bank’s delivery of services and operations,” Palileo said.
Cebu City Councilor Raymond Alvin Garcia proposed an ordinance amending the city’s Omnibus Local Tax Ordinance to increase from 50 percent to 75 percent of the 1 percent of the gross annual receipts of the banks and other financial institutions.
While CBC recognizes the city’s authority to levy taxes, Palileo cited Section 51 of the Local Government Code providing that the city may exceed the maximum rates allowed for the province or its municipalities by not more than 50 percent, except the rates of professional and amusement taxes.
In his proposed ordinance, Garcia said Section 143 of the Local Government Code states the maximum business tax rate that may be imposed by a city is 75 percent of 1 percent of gross receipts of the preceding calendar year derived from interest, commissions and discounts from lending activities, income from financial leasing, insurance of premium of banks and other financial institutions.
Garcia added the 50 percent of 1-percent gross annual receipts of banks and other financial institutions is applicable mainly to municipalities and not to cities, like Cebu City, which is highly urbanized.
Palileo said the banks are currently implementing various projects like the Check Image Clearing System. The Philippine Clearing House Corp. has implemented the system upgrade to shorten the clearing period of checks.
He added there are also banks switching to Euro-Pay, Mastercard or Visa (EMV) for automated teller machines (ATM) due to recent events of ATM-card fraud in the country.
“The Banko Sentral ng Pilipinas has recently obligated all banks to convert to the EMV technology free of charge to all bank clients,” he said.
Under the proposed ordinance, Garcia put a clarification on the items covered by gross annual receipts, since there is an ongoing legal action between the city and a leading bank on local business taxes on banks.
The imposition of items covered by the gross annual receipts of banks and other financial institutions will avoid confusion in the city’s collection of business taxes and will pave the way to guide the banks and other financial institutions in the payment of the taxes, Garcia said.
He added the gross receipts for the preceding calendar year, as applied to banks and other financial institutions, shall be limited only to those derived from interest, commissions and discounts from lending activities, income from financial leasing, dividends, rentals on property and profit from exchange or sale of property, insurance premiums.
City Budget Officer Marietta Gumia said the office will support the passage of the ordinance as the measure will increase the city’s income to support its programs, projects and activities of the city government.