February 15, 2008 | 12:00am
It was the first time I attended a session at the brand new Session Hall of Cebu City. Call it a coincidence that one of the major topics aside from the simmering Banilad-Talamban traffic problem was a discussion on the proposal of Councilor Hilario Davide III who proposed to abolish the Amusement Taxes because it has become irrelevant. I can only concur with his observations. This issue was the subject of the report by Councilor Jose Daluz, Chairman of the Committee of Budget and Finance.
I was born into a family of theatre owners hence we have come to know about the history of amusement taxes. Way back in the 1950’s the only major place for entertainment was the moviehouse or the theater and the national government exacted its amusement taxes of 15% in its gross receipts. From the years 1950s to the 1990s I would like to believe that the number one taxpayers of Cebu City were the 18 moviehouses that operated mostly in the downtown business district and the two along Mango Ave. When Martial Law was declared on Sept.21,1972, the Marcos Dictatorship ordered an across the board 100% increase in the Amusement Taxes. It was taxation without representation! But then the theaters were still the king of the entertainment world.
Suddenly during the 1960s the first competition or threat to the moviehouse appeared in the form of the black and white television. I say they were a threat because it was for free. I still remember the days when we waited for the tv series “Combat” or Dolphy’s “Buhay Artista”. It was then that my father told us that because of television, he foresees the decline in the movie industry. It was then during the 70s that the downtown theaters finally allowed Tagalog movies to prepare for this decline.
But then the Betamax came to threaten not only the movie industry, but even mainstream television as well. But those were times when the cost of owning a Betamax machine was very prohibitive. But as technology grew the number of movie theaters in Cebu City started to dwindle from 18 theaters to only five today. Then came the CDs, VCDs and finally the DvDs and the 1990s ushered one of man’s greatest technological achievements, the PC linked to the Internet. Now you can download your movies into your own PC (now cellphones have that capability) thus providing anyone with entertainment not only in their own living rooms, but at their fingertips.
Where does this leave the City of Cebu? When the Ceboom started, business taxes and realty taxes started gaining and today Amusement Taxes is a mere 3rd placer in the city’s revenue generation. But in the meantime, thanks to the rampant piracy of movies that are sold indiscriminately in our sidewalks, as my father predicted, the theater industry has gone from bad to worse. One of the reasons for this is the excessive amusement taxes that was exacted at the time when our people had to choice but to go to a movie theater, something that they don’t need to do anymore.
Worse of all, there are now many new forms of amusement or entertainment that have “escaped” the attention of our City Councilors perhaps because they didn’t know of the ways how to exact taxes on such establishments. This is why Vice-Mayor Mike Rama asked for the creation of a special body that would aid or advise the Committee of Budget and Finance on the various forms of businesses that have escaped the scrutiny of the committee. The City Council should have created this committee decades ago.
Amusement Taxes are unheard of in the United States. Will the City of Cebu take the lead in abolishing Amusement Taxes? If Councilor Daluz and his committee were to decide on this, their recommendation would be to keep the Amusement Taxes but on a reduced rate. I would like to see a phaseout plan, which would reduce the Amusement Taxes back to its old level of 15% then map out a program by which the City of Cebu can replace this revenue from other sources so that at the end of a, say 10-year period, the City of Cebu would no longer be dependent on Amusement Taxes or by that time, there will be no more theaters operating and nothing for the city to tax anyway.
What is lamentable here is that, because the City of Cebu exacted the maximum allowable by Congress for charging Amusement Taxes, Cebu City has lost a lot of opportunity to hold both local and foreign concerts and shows because the taxes are just too prohibitive. This is why the City Council came up with a “collatilya” allowing them to exempt certain shows or concerts for as long as they give to a local charitable organization. But then doing so makes it totally unfair to the movie theaters that are the lifeblood of the City government in giving them revenue. With the movie industry gasping for its last breath, the City of Cebu should lift its finger to help the very industry that for decades was their number one tax contributor.
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