Malaybalay City Council to review tax incentives given to Gaisano Mall

Councilor Victor Aldeguer, chair of the Committee on Commerce and Trade, said they would “look at possibly amending City Ordinance 637 Series of 2008, which embodied the city’s offered incentives both to Gaisano and Sons, Inc. and companies intending to rent in the mall.”

The ordinance provides incentives for the firm’s first five years of operation, with full implementation of taxation only in its sixth year of operations.

The city exempted the firm from paying real property tax for five years and asked the mall owners to pay only the Special Education Fund. The ordinance also provides exemption from the payment of amusement tax for five years, and providing payment only of the current business tax rate from its operation for five years.

For locators, it has offered to give full exemption from payment of business tax on their first year of operation and subsequent 25 percent increase in imposition every year after until full implementation on the sixth year.

But Zubiri ranted during the City Council session on March 17 that the business tax incentives provided for the business locators inside the mall were unfair to those who rent outside.

“That is very unfair. It doubles incentives given to Gaisano. I would hope it would be corrected by the Sanggunian (City Council),” he said.

Zubiri, the presiding officer of the city council, said he was not present when the incentives ordinance was approved in July 2008 and as the construction of the P200 million, four-storey mall in downtown Malaybalay went full swing.

Zubiri said that the incentives were offered only to locators with capitalization of at least P500, 000, according to Section 3 of the ordinance.

Zubiri said they were yet to assess the exact course of action saying it has become a legal issue even as it assured mall owners that what the City Council was doing was contained in the city’s investment code.

“I don’t think there will be a problem since we will be having the investment code. We are not taking something. We approved but we found out later it has implications on the others. It is just a matter of telling Gaisano. Gaisano will lose nothing,” he said.

Gaisano representatives could not be reached for comment.

Zubiri also questioned the absence of the mandated 15-meter road right of way or highway allowance in the building and warned that it was “bad precedent” in having obtained the building permit despite the “right of way” violation.

Councilor Jaime Gellor Jr., the presiding officer on July 15, was the one who signed the ordinance in place of Zubiri. It was signed by Mayor Florencio T. Flores Jr.

Flores said, however, the move would put a question mark on the credibility and integrity of the city.

He said the city council should have thought of this well first before giving these incentives.

“After you offered them the incentives, you will take them back?” he said.

Flores said incentives should be commensurate to the investments. “The Gaisano Mall project is considered the biggest building project in Malaybalay City to date,” Flores said.

“This will naturally make Gaisano feel bad. But that is the prerogative of the council. If they think this is good for everyone. But there will be repercussions,” he said.

Flores said the city council should weigh “this thing very well before they act on this”.

“It was the city council who offered those incentives. The Gaisanos, in fairness to them, did not demand specific incentives. They only told us they were offered incentives in other cities,” he said.

They (city council) might be pleasing one or two people but they might sacrifice a big investment, he said.

Meanwhile, City Engineer and building official Teodocio Pabillaran said Gaisano and Sons, did not violate the right of way.

A special rule is being followed in the city’s downtown area, he said.

Pabillaran said only 10 meters of right of way in each side of the highway was observed between the bridge near the Welcome marker in Kalasungay and the Sawaga bridge near Casisang.

“That’s what I told the vice mayor when he asked me about that yesterday,” he said.
On March 3, the city council asked the session audience at the gallery to move out as they would hold an executive session.

A source told this reporter later that Councilor Conrad Barroso raised an issue on the incentives. Barroso was on leave at the time the ordinance was passed.  The source said he raised an issue about the passage of the i
ncentives ordinance exclusively for the retail giant.(Walter I. Balane / MindaNews)