QC biz org warns of shutdowns due to tax hike

A local chapter of the Philippine Chamber of Commerce and Industry (PCCI) assailed the recent 10-percent increase in business taxes in Quezon City, warning it could lead either to the shutdown of businesses or to higher prices.

In a press conference Wednesday, PCCI-QC president Carl Balita said that while his group was not completely against a tax hike, City Hall should have imposed the increase on a staggered basis, perhaps spread across five years rather than in one stroke.

He called the 10-percent increase “oppressive and excessive,” aside from being a surprising development for the business community.

“Considering that the ordinance was signed only in the end of 2013, the significant tax increase was not anticipated and was therefore not considered in our operational costs in 2013,” Balita said on behalf of the more than 100 members of the group.

“If big businesses are wincing and feeling the pinch, what more with micro, small and medium enterprises (MSMEs). They could be compelled to pay taxes equivalent to their actual business capitals,” he said.

He said most businesses might decide to just close shop, relocate or “be compelled to raise prices.”

MSMEs make up 97 percent of the 67,000 business establishments in Quezon City, according to Balita.

Five early casualties

PCCI-QC’s legal counsel, Giovanni Melgar, said at least five PCCI members had closed shop because of the raised tax rates.

The group is currently in talks with the local government to seek the suspension of the tax increase, Melgar told the Inquirer.

He said the local chamber was also questioning the legality of the tax hike ordinance since the business sector was hardly represented in the public hearings held on Nov. 11, 22 and 26 last year. Most of those who attended were office secretaries and assistants, he noted.

“Even if there was a handful of businessmen present, they opposed the measure. They might have simply been invited to listen but not to be heard,” he remarked.

Dr. Jim Sanchez, a PCCI-QC member, said he was compelled to close down his multispecialty and diagnostic clinic in Eastwood City after 10 years in operation due to the steep P280,000 rental as well as the recently approved business tax increase.

Sanchez said he had been paying P150,000 in business taxes annually but that the new rates would push it up to P300,000. “I decided to just close shop. I cannot possibly pay that. I consider my clinic more of a service rather than a business,” Sanchez said.

The city government earlier explained that the ordinance was long overdue since the local business tax had not been raised since 2001 and that funds were badly needed for new classrooms under the Department of Education’s K-12 program.