LGUs to lose 20% from cut in cinema tax

MANILA, Philippines - Local government units (LGUs) stand to lose as much as 20% of their current collections from admission fees of proprietors, lessees or operators of theaters and cinemas if the proposed cut in amusement tax rate to 10% from as much as 30% were to become law, the Finance department has warned. The bill, which hurdled the House of Representatives ways and means committee last December 2, seeks to amend Section 140 (a) of Republic Act 7160, or the Local Government Code (LGC), which currently authorizes LGUs to impose an amusement tax rate of not more than 30% on the gross receipts from admission fees in cinemas and theaters. In a position paper dated last November 27, Finance Undersecretary Gil S. Beltran said that, based on the average P724.04-million annual total LGU collections of amusement tax from 1998 to last year, a cut in tax rate to 10% from a maximum 30% would reduce these revenues by P144.81 million to P579.23 million. The amusement tax accounted for about 1.9% of total annual P39.964-billion taxes LGUs collected in those years. The Finance department argued that each local government would be in the best position to decide whether to reduce the amusement tax rate and by how much, "since they are in the best position to know the funding requirements in their respective jurisdiction." "Anyway, the 30% amusement tax rate under the LGC is a ceiling and, therefore, each LGU might consider any proposed reduction, depending on their respective capacity to absorb such depletion on their revenue collection." — RAMR, BusinessWorld