LOCAL GOVERNMENT UNITS (LGUs) ought to think about imposing an amusement tax on video streaming platforms, after the closure of cinemas, live performance venues and theaters resulted in almost P470 million in foregone revenues final yr, a state assume tank mentioned.
The Nationwide Tax Analysis Middle (NTRC) mentioned amusement tax collections are “comparatively insignificant” in contrast with different tax sources akin to actual property taxes and native enterprise taxes, however LGUs can nonetheless broaden the protection to generate extra revenues.
“The protection of native amusement tax could also be broadened to incorporate locations that could be thought-about as locations of amusement. As well as, the phrase ‘locations of amusement’ should be outlined appropriately in order to incorporate different institutions that could be thought-about as such,” NTRC mentioned in its analysis journal titled Affect of COVID-19 Pandemic on Native Amusement Tax Assortment of LGUs within the Philippines.
In america, the NTRC famous some states have explored the potential of imposing gross sales taxes on leisure streaming websites akin to Webflix and Amazon Prime Video however there’s nonetheless no consensus on a tax on these platforms. It cited the telecommunication taxes imposed by South Carolina and Florida on video streaming companies, in addition to Chicago’s 9% amusement tax on streaming websites.
Congress can evaluate and amend the Native Authorities Code of 1991 to broaden the protection of native amusement tax, so LGUs can discover different actions that may be lined and lift extra revenues, the assume tank mentioned.
“There are on-line streaming exhibits that may nonetheless be classified as sources of amusement. The LGUs can faucet these websites as sources of tax revenues because the nation enters the chapter of the ‘new regular,’” NTRC added.
Beneath the Native Authorities Code, LGUs could impose amusement tax on theaters, cinemas, live performance halls, circuses, boxing stadia and different locations of amusement at a ten% fee at most, based mostly on the gross receipts from admission charges.
For the reason that lockdown started in mid-March final yr, leisure actions have been restricted, with cinemas, theaters and live performance venues nonetheless not allowed to function. This prompted many to show to streaming companies akin to Netflix and Amazon Prime Video to look at films and different exhibits.
NTRC famous that LGUs particularly in Metro Manila have been severely affected by the hunch in amusement tax collections. The most important contributors embrace the cities of Quezon, Pasay and Makati.
The assume tank estimated the closure of film theaters resulted in P83.74 million of foregone income from native amusement taxes. That is solely based mostly on 4 film screenings every day in 433 cinemas that might have offered 25 P250 tickets.
Tax income losses from cinema and occasion ticket gross sales of SM Prime Holdings, Inc. alone additionally resulted in P376 million in foregone earnings as of end-September 2020.
That is on prime of the estimated P9.81 million in foregone revenues from taxes on six live shows scheduled from March 14 to Could 20 that have been canceled.
“LGUs want a broader vary of income instruments. These ought to embrace income sources that robotically develop with the economic system, and at current dwell streaming could also be intently thought-about as a further income supply of LGUs,” NTRC mentioned.
“Nonetheless, it’s essential that social and financial points are considered in order that new funding sources shift prices pretty on those that can most afford to pay,” it added.
The Bureau of Native Authorities Finance (BLGF) didn’t reply to queries as of press time.
Knowledge from the BLGF confirmed provincial, metropolis and municipal treasurers collected P205.71 billion by way of native taxes within the 9 months to September final yr, exceeding the revised P193.04-billion goal for all the 2020.
For this yr, LGUs have been tasked to gather P223.9 billion, up by 8.84% from its precise collections as of finish September final yr. — Beatrice M. Laforga