Cebu City mulls tax amnesty to help businesses amid minimum wage hike

Good news for the region’s minimum wage earners, the Regional Tripartite Wages and Productivity Board has approved an increase of P31 in your take-home pay.

CEBU CITY, Philippines — Cebu City is looking into the possibility of giving tax amnesty as a form of reprieve to businesses following the P31 minimum wage increase in the region.

Cebu City mayor Michael Rama said the wage hike will definitely affect businesses in the city as they try to cope with the additional cost of salaries and manpower.

“Any increase will always be, based on my experience, be reacted in a different manner. There can never be a wage increase that is somewhat acceptable. That’s why, I wish, this issue about wages can only be addressed without much reaction if the economy will really be that better.,” said Rama.

For the mayor, the wage increase will cause a salary distortion that will be an additional cost for the businesses.

The salaries of rank and file employees may begin to equal the salaries of managerial employees, forcing some businesses to raise the salaries of employees across the board.

This may cause layoffs and an eventual rise in unemployment in the city, and then, this becomes a problem for the government.  This is why he urged businesses to hang tight and adjust to the changes.

“I’m pleading to management because if there will be lay-off, work rotation, it will become a government problem. It becomes a pressure on the government. I am pleading that employers may be able to absorb or utong. Then let’s all help as one country with the new President, Vice President, and new Secretaries. I am pretty sure that economy is a focus that this present administration will be tackling,” said Rama.

In the meantime, they are looking into a possible tax amnesty as a form of reprieve for the businesses.

However, he said that they must be careful because tax amnesties will reduce the income of the city government, which affects services.

“Tax amnesty, we’ll take a look at it. If tax amnesty will be extended, then the budget of the government will also be reduced. Once the budget is reduced, the services will also be a part of the consequence that is also affected,” said Rama.

The Cebu Chamber of Commerce and Industries (CCCI) said a tax amnesty will really help the businesses, but it must be given to deserving businesses.

“That’s very welcome. But the city should also be careful on how they structure the tax amnesty for that one. It has to be for really deserving companies,” said CCCI President Charles Kenneth Co.

Co said that the wage hike is only fair and businesses may eventually handle the change.

He does not see a massive lay-off as the businesses can always opt to increase the price of products so consumers can share the burden of the wage hike.

“I believe it’s a fair increase. It was higher than we expected but our workers also need it. Businesses need to focus now on increasing productivity and output in order to cope with the increase in labor costs so we can maintain our operations without letting go of workers. It is also possible that some businesses will need to increase their selling price to pass on some of the cost,” he said.

He urged chamber members to be resilient and make production adjustments to keep up with the changes.     /rcg

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