Better Philippines

Excessive Fees Bad For Business

The beginning of the year signals the start of the business renewal season. At the various city and municipal halls, business owners are now scrambling to beat the deadline to avoid penalties.

The process for the renewal of business permits is as follows:

1. Compilation of business and other documents (old mayor’s permit, declaration of sales, tax documents, official receipts of payments etc.)

2. Presentation of documents for evaluation and assessment

3. Payment of official fees (city tax, garbage fee, sanitary fee etc.)

4. Claiming of Business Permit

The process stated above is the simplified and generalized version. Each local government unit follows its own system. From what I’ve been hearing from some of my businessmen friends, most LGUs here in Metro Manila have already optimized their systems for the benefit of business owners. Unfortunately a few still have dismal systems. I asked a friend of mine whose firm provides business renewal services to give me an assessment of the various LGUs. He gave me a ranking from the most to the least business-friendly. Here it is:

1. Makati
2. San Juan
3. Pasig
4. Manila
5. Muntinlupa
6. Paranaque
7. Marikina
8. Mandaluyong
9. Quezon City

I can’t really say I was surprised with the ranking he gave to Quezon City. For the past several years, I have been hearing my friend complain about how the system in Quezon City Hall has gone from bad to worse. He has two words to describe it: Red Tape.

But that’s not the worst. His biggest gripe concerns the evaluation of past income from which the amount of city tax and other business fees is computed. My friend says QC’s evaluators routinely impose their own estimates without due consideration to the veracity of the documents submitted by business owners. He cites the case of one of his clients who opened a barber shop just last month (December). He explains that since it was just a new business the barbershop naturally did not make much money yet. It just grossed P2,850 as of December he says.

Now, here’s the big shocker. The evaluator who checked the barbershop’s papers rejected the declared amount and imposed an income declaration of P200,000 from which the total amount of city tax will be derived.

My friend says this has been going on at QC City Hall for the past few years now. He says things even took a turn for the worse. Now, the imposition of arbitrary amounts is no longer dependent solely on whimsy. QC Hall’s evaluators are now actually following some kind of standard. Just go to city hall and you’ll find a memo about this posted somewhere.

The issue here is not so much that QC Hall’s evaluators refuse to accept the fact that not all businesses make money and that some actually do not make anything at all as in the case of businesses that were registered but whose operations did not actually push through. My friend explains that it’s more about the fact that the amounts imposed by the evaluators are excessive — abusive even.

Now I’m wondering how Quezon City Hall manages to curb graft and corruption within itself while such a practice is in place. Only a fool would think that no haggling and no “offers” to assist in the circumvention of this city tax scheme are ever made between the evaluators/assessors/collectors and the city’s business owners.

Perhaps, Quezon City Mayor Sonny Belmonte should look into this — if he doesn’t already know about it.