THE Baguio Local Finance Committee (LFC) is planning to increase business tax rates after 22 years of no rate increases to catch up to the rates mandated under the Salary Standardization Law.
Currently, the LFC is working on a proposal and studying whether the tax increase, which would total a 40 percent rate increase, will be implemented gradually or in a single increase.
According to City Treasurer Alex Cabarrubias, an increase in business tax collection is needed to raise funds for the city, in particular the 51 priority development projects outlined by the current administration.
Cabarrubias also said that the 40 percent projected business tax increase is to catch up with 22 years of no tax increases, when the city should have been increasing its rates.
“We are allowed to increase taxes every five years but we did not, so for 22 years we should have increased four times at 10 percent each. Therefore, we can increase our tax table by 40 percent according to the local government code,” Cabarrubias said.
With the lack of a tax increase, the city grew increasingly dependent on National Tax Allocation (NTA) as internal revenue was not enough to keep up with city needs.
He said the proposed increase was presented to the Bureau of Local Governance and Finance (BLGF) as early as 2019 but was shelved by the COVID-19 pandemic.