Law to let LGU’s tax biz sales filed

By Elias O. Baquero

Monday, January 16, 2012

SIX Cebu mayors expressed their support for Senate Bill 42, which is aimed to declare 90 percent sales of businesses as taxable by the city or municipality where the factory, project office, plant or plantation is located.

City Mayors Valdemar Chiong (City of Naga), Aurelio Espinosa (Toledo City) and Celestino Martinez Jr. (Bogo), Mayors Democrito “Aljon” Diamante (Tuburan), Ricardo Ramirez (Medellin) and Ace Binghay (Balamban) said it will increase the income of the local government units (LGUs).

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They said they are happy that Sen. Vicente Sotto III introduced the bill so their localities will be prioritized in the sharing of sales tax from investors who have existing business or for businesses that will locate in their towns and cities in the future.

Common practice

In his explanatory note, Sotto said that before the enactment of Republic Act (RA) 7160, otherwise known as the Local Government Code, the common concern of local officials was the practice of the National Government of allowing businesses to pay their sales tax in the locality where their principal office is located.

This means that even if the manufacturing firms have branches and plants in Cebu, they are paying sales tax in Manila or Makati where their headquarters are based. The localities, which are hosting the plants and are providing the transportation facilities such as roads, are holding an empty bag.

Sotto wants to reverse the situation wherein the LGUs hosting the plants and branches shall collect 90 percent of the sales tax while the cities and municipalities where they are holding principal office shall only be entitled to tax 10 percent of the sales.

These businesses include manufacturers, assemblers, importers and plantations, whose earnings mostly come from the operations in the provinces, cities or municipalities outside Metro Manila.

Benefits

Chiong said the City of Naga will benefit if Senate Bill No. 42 will be passed into law,considering that it is hosting the plant of Apo Cement Corp., which is selling cement products nationwide and its principal office is in Manila.

Toledo City, on the other hand, will benefit from the passage of the bill because it is hosting Carmen Copper Corp., a mining firm that is exporting copper and gold, but with principal office in Manila.

Bogo City will soon host Robinsons Mall, hence, Martinez said his administration will benefit if the bill is enacted into law.

Published in the Sun.Star Cebu newspaper on January 16, 2012.