Some LGUs violating 10% amusement tax rate ceiling

OFFICIALS of the film and music industries have sought the help of Congress in ensuring that local government units comply with the law, which reduced the amusement tax rate to 10 percent from 30 percent.

In a hearing conducted by the House Committee on Ways and Means chaired by Rep. Hermilando Mandanas (2nd District, Batangas), the officials disclosed some LGUs have not complied with the law that reduced the amusement tax to 10 percent.

Leo Martinez, director-general of the Film Academy of the Philippines, said they have not felt the benefits of the law yet which reduced the amusement tax.

“The problem is that the reduction is not implemented fully. Some LGUs say an enabling ordinance is needed to implement the reduction,” Martinez said.

Martinez, however, said they have no figures on how many LGUs have not been complying with the law.

Mitch Valdez, chairperson of the Organisasyon ng Pilipinong Mang-aawit (OPM), the country’s biggest and oldest existing organization of Filipino performing artists, said some LGUs have been generous in waiving the amusement tax but in exchange for this they asked producers to contribute to favorite foundations of LGU officials.

“It is dictated upon what charity organizations we should donate to. We would like a regular regulation on this. We prefer Congress, not the LGUs, to handle this issue since we might be stepping on some sensitive issues. We want the protection of a bigger umbrella institution which is Congress,” Valdez said.

Valdez said the OPM is appealing to lawmakers to exempt from the amusement tax provision of the Local Government Code all locally-produced cultural productions including music concerts, theatrical or stage plays, dance and other live performing arts productions featuring Filipino talents.

“We are ventilating this call in reaction to the continuing aggravation suffered by Filipino performing artists and their
promoters vis-à-vis the unfair competition posed by the influx of foreign acts who, at times, are even favored with discounts or exemptions from payment of amusement taxes which Filipino productions could hardly avail of,” Valdez said.

Mandanas said those LGUs asking producers to pay more than 10 percent amusement tax are transgressing the law. He said Congress not only makes the law but also has oversight powers to check any abuses of the law.

Stela Montejo, Department of Finance director for fiscal policy, said there is no more legal basis for LGUs to impose an amusement tax higher than 10 percent. “Nothing can be above the law. Affected producers can always take up the issue with the Department of Interior and Local Government which is part of the executive.”

Bayan Muna Rep. Teddy Casiño said LGUs were abusing their discretion when they asked producers to donate to their favorite charity organizations in lieu of paying the amusement tax.

Casiño is author of House Bill 3787 seeking the amusement tax exemption for local artists promoting original Filipino music. He said his proposal is a reminder to government officials that they should implement the law properly, that the ceiling amusement tax rate is 10% as set by Republic Act 9640, which was enacted by Congress in 2009 and
amended RA 7160 or the Local Government Code of 1991, and that such will be taken from the gross receipts of admission fees, refunding whatever is given in advance.

“The high and arbitrary amusement taxes being paid by concert artists and producers prohibited them from earning enough, with some barely breaking even. This lack of incentive dissuaded producers and managers from organizing live performances. At the very least, they scrimp on the production. This may translate to lower employment opportunities
in the industry, as well as a tendency to hold back the artist’s creativity in favor of economic practicalities,” Casiño said.

Relatedly, House Bill 3200 filed by Rep. Sigfrido Tinga (2nd District, Taguig City) seeks to promote the local arts and entertainment industry by providing the local movie and film industry corporate tax breaks and exempting venue operators from the payment of amusement tax when showing locally produced films and music events featuring Filipino artists.

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