Thursday, May 28, 2020

Why Is Baguio City Requiring Business Permits From Online Sellers?

Baguio City has decided to require business permits from online businesses and online sellers. This was announced through the Facebook page of the city’s Public Information Office early today. In my opinion, this is a very insensitive decision at a time where people are struggling to find ways on how to cope with the financial effects of the ongoing health crisis. But even under normal circumstances, this is a move that doesn’t make complete sense.

Hey, taxes are generally good. We have roads, schools, museums, parks, and a gazillion other good things because of taxes. Regulation is also good and requiring business permits is a form of regulation. Without regulation, things will descend into chaos. Without regulation, there won’t be taxes. And if there are no taxes, there won’t be roads, schools, etc.

However, the government has to be very careful on how they regulate things and how they collect taxes. They have to be especially careful from whom they collect these taxes. This brings me to Baguio City’s decision to require business permits from online businesses and sellers. It’s a very bad idea, I’ll tell you that.

First of all, there are different types of online businesses and sellers. There are the giants like Lazada and Shopee. And then there are the small ones like stay-at-home moms, students, and even full-time job holders who just want to earn an extra few bucks. Lazada and Shoppe should have business permits and pay taxes. That’s a no-brainer. Should the small online sellers get business permits too?

I also sell online every now and then as a part-time gig so I have an idea of the ins and outs of the business. I’ll tell you right now that most of us online sellers find the idea of getting a business permit and paying taxes ridiculous.

Here, let me give you a list of the types of people who sell online:

  • Moms looking for a few extra money for diapers and milk
  • Students selling stuff to augment their meager allowances
  • People who just want to get rid of things they are not using
  • People who already have jobs but their salaries are not enough so they sell online

The point here is that most online sellers are just making extra cash. And this extra cash doesn’t even come regularly. Weeks can go by without you selling anything.

Of course, there are online sellers who are raking in cash. Some even sell online full-time. But these are rare. These very successful online sellers are very few compared to most online sellers. Most online sellers are just getting by. They are doing it part-time. The amounts they earn are mostly small so requiring them to get business permits is absurd.

The Effects on Dropping Shops
Some online sellers meet up with their customers to hand over their goods. However, most online sellers use the services of a dropping shop. The seller pays the dropping shop a small fee to handle the product. The buyer can pick up the product at the dropping shop any time. It’s a system that benefits everyone.

This system breaks down if you start requiring small online sellers to have permits. The earnings of a dropping shop depends on online sellers and droppers. If small online sellers are required to get permits, many of them wills top selling because it’s no longer worth the hassle. If they stop selling, this would mean less sellers dropping their products at the dropping shops. In short, everyone loses.

Baguio City Needs to Rethink Their Decision
Whatever angle you look at it, requiring online sellers to get permits will do more harm than good. It’s the small sellers and dropping shops who will suffer the most from this decision. This is especially true in these trying times. Many people who have lost their jobs or sources of income are now giving online selling a shot. And you want to take that away from them by making the process too difficult and too expensive?

Final Words
The city has to review their decision. Think through it all over again. Maybe at least consult with the parties that will be greatly affected by the decision. Furthermore, they have to clearly define what they mean by “online businesses”. From their announcement, they described online businesses as almost every entity that sells goods online.

Here’s an idea. Require permits from the online businesses and sellers that are earning a lot online. This means they earn enough that it’s their full-time source of income. As to the majority of online sellers who are only earning extra cash, leave them alone. Especially in these times where every peso counts.