Mayor’s Permit Fee is not a Tax

 

    Securing or renewing of a Business or Mayor’s Permit can be quiet stressful for some entrepreneurs especially if the fee charged is excessive and iniquitous.  But the payment of it cannot be dispensed with since it is imposed pursuant to the police power delegated to the Local Government Unit (LGU) under the general welfare clause of Local Government Code (RA 7160). 

    The fee charged is oftentimes mistaken as tax.  It is rather a LICENSE fee for the regulation or legalization of a business or occupation while tax is purely for revenue purposes.  Hence, the non-payment of it shall render the business or activity illegal, whereas non-payment of tax shall only give rise to criminal and civil liability under sec. 254 of the National Internal Revenue Code.

    It is a kind of non-tax revenue since it partakes of the nature of revenue of an LGU that is not generated from tax.  The fee charged is undeniably to cover the expenses for supervision, inspection and control by the government as held in the case of The City of Ozamiz vs. Lumapas and Hon. Marave; G.R. No. L-30727 July 15, 1975.     

Excise Tax/"Sin Tax"

Excise Tax is the tax being imposed on tobacco and alcohol products. It is similar to VAT which partakes the nature of an indirect tax since the burden of payment is ultimately shifted to the consumer.

It is also called “Sin Tax” because the goods being taxed are considered vices. Usually, the tax rate is extremely high to discourage the production and consumption of liquor or cigarettes.

Obviously, the society agrees with the Bible. It is clearly stated in some passages that getting drunk is a sin.

Ephesians 5:18
Do not get drunk on wine, which leads to debauchery. Instead, be filled with the Spirit.

Proverbs 23:21

²¹ for drunkards and gluttons become poor,
and drowsiness clothes them in rags.

And so is smoking. It is toxic and detrimental to our body. (I cannot even stand the smell of it.) Honoring God with our body includes achieving good physical health in order to be an efficient servant of God. A sick person normally has a very limited capacity.

1 Corinthians 6:19
Do you not know that your body is a temple of the Holy Spirit, who is in you, whom you have received from God? You are not your own; ²⁰you were bought at a price. Therefore honor God with your body.

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Tax on Sale of Real Property

The determination of the tax imposed on SALE of Real Property depends on whether the property is capital asset or ordinary asset.

Capital Gains Tax is imposed if the property is classified as capital asset of the SELLER while Creditable Withholding Tax is imposed if the same is classified as ordinary asset.

Pursuant to the provisions of Section 244, in relation to Sections 57(A) and (B) of the National Internal Revenue Code of 1997, the Revenue Regulations No. 30-2003 amended pertinent provisions of Revenue Regulations No. 2-98 which includes imposition of WITHHOLDING as a mode of remitting Tax on the Sale of Real Property to the BIR.

According to Section 5 of Revenue Regulations No. 30-2003, albeit the burden of paying Tax is really upon SELLER-income earner, the obligation to withhold is imposed upon the BUYER-payor subject to the corresponding withholding tax rate. Provided, that the Official Receipts of payment and the corresponding Certificate of Taxes Withheld shall be issued in the name of the SELLER. (Certificate of Final Income Taxes Withheld for real property classified as capital asset or Certificate of Creditable Taxes Withheld for ordinary asset)

Unjustifiable refusal of the SELLER to be subjected to withholding shall be a ground for the mandatory audit of his income tax liabilities (including withholding tax) upon verified complaint of the BUYER.

Gross Income vs. Net Income

I admit, I had consistently paid my tithes on the net income rather than on the gross income until God rebuked me. I often argued (some Christians also do the same) by comparing tithing with the Income Tax system of the Government wherein income tax is imposed on the NET taxable income computed as follows: (sec. 31-35, National Internal Revenue Code of the Philippines)

1. ALL income
– Exclusion
= GROSS INCOME

2. Gross Income
– Allowable Deductions
= Net Income; (taxable net income in the case of corporation)

3. Net Income
– Less Personal and Additional
= Taxable Net Income;

4. Taxable Net Income
x Income Tax Rates (on graduated basis)
= Income Tax due;

5. Income Tax
– Creditable Withholding and/or Tax Credit
= NET TAXABLE INCOME.

GROSS INCOME pertains to ALL such gains, profits or income derived from any source. Income metaphorically is described as the “fruit” while capital is a “tree”.

The application of the rule that tithing must be based on our GROSS income is pursuant to Proverbs 3:9-10:

⁹ Honor the LORD with your wealth,
with the FIRSTFRUITS of all your crops;

The Lord requires our first fruits, which must be the FIRST and BEST of whatever we receive. Tithing shows that God is our priority. Therefore, if we pay our tithes based on net income, we put the government ahead of God.

Further, tithing is giving not only money but it can be non-cash assets such as stocks, property, etc. to support the work of God.

Related Articles:

Tithes before Taxes

Warren Buffet's (and Lorille’s) Advice to Young People

Tithes before Taxes

Time and again, taxes are defined as the lifeblood of the Government and their prompt and certain availability are an imperious need. Without taxes, the government would be paralyzed. Revenues derived from taxes are intended primarily to finance the government and its activities and are thus exempt from execution.

Tax differs from license fee. Tax is imposed to raise revenue for public use. It is paid after income is earned and non-payment of it does not make the business illegal. While license fee is imposed for the regulation of lawful business or occupation in the exercise of police power of the state. It is paid at the start of the business and non-payment thereof makes the business illegal.

But please pay your ten percent (10%) tithe before taxes. We need to pay our tithe on the GROSS INCOME and not on the net income. As soon as you receive money, remember the storehouse which is the local or internet church you attend where you get fed spiritually; consider the needs of your beloved pastors, ministers and the church servants.

Bear in mind, that we rob God when we do not give the tithe because that ten percent of your income belongs to the Lord. Hence, we need to return to God what is His. Kindly reflect on the following passage:

Malachi 3:8

⁸ "Will a man rob God? Yet you rob me.
"But you ask, 'How do we rob you?'
"In tithes and offerings."

GIVE 10% OF YOUR GROSS INCOME BUT GIVE 100% OF YOUR HEART!

Related Article:

Warren Buffet's (and Lorille’s) Advice to Young People