In our article about the local tax of an i-café, the use of presumptive income level (PIL) as the basis for computing the local tax of a business was mentioned. We defined PIL as the estimated figure or an intelligent guess of how much revenue does a certain kind of business make in a year. An estimated income figure is used by a local government unit (LGU) especially when actual receipts are not issued in some sales transactions of the establishment. This practice is usually applied by LGUs on businesses in public markets, beauty parlors, etc. including i-cafés.

The levy of local tax use of presumptive income level by an LGU in computing it for some businesses in its area is not without basis.  Section 129 of the Local Government Code about Power to Create Sources of Revenue says:

Each local government unit shall exercise its power to create its own sources of revenue and to levy taxes, fees, and charges subject to the provisions herein, consistent with the basic policy of local autonomy. Such taxes, fees, and charges shall accrue exclusively to the local government units.

while Section 130 (b) says:

Taxes, fees, charges and other impositions shall:

(1) be equitable and based as far as practicable on the taxpayer’s ability to pay;

(2) be levied and collected only for public purposes;

(3) not be unjust, excessive, oppressive, or confiscatory;

(4) not be contrary to law, public policy, national economic policy, or in restraint of trade;

The PIL of an i-café than an LGU imposes on the business is often contested by the owner. It is the human tendency of many businessmen, i-café owners included, to underdeclare their income so LGU authorities must exercise prudence in establishing the PIL of businesses in their areas. In the case of the PIL of an i-café business the following figures and factors can be considered:

A) A gross income ranging from PhP75.00 to PhP150.00 per workstation or computer depending on the location and number of operating hours of the i-café in a day.

B) The total of three hundred (300) working days in a year to give allowance for shop’s downtime or non-operating days due to schedule maintenance, power outages, Internet disconnections, rest days, etc.