Cebu City mulls tax hike

·2 min read

THE Cebu City Government may need to impose an increase in taxes as Mayor Michael Rama started his term on July 1, 2022, with no available budget for new projects.

The city’s local finance committee (LFC) disclosed during a press conference on Monday, August 8, that the City has spent more money than its income for the past two years.

Lawyer Collin Rosell, secretary to the mayor, said the available cash in the city’s purse, as of June 30, 2022, was P4.54 billion, but the City has payables worth P5.04 billion.

“Diritso nga pagkaistorya, walay libre nga kwarta nga magamit kung unsa maoy proyekto,” said Rosell. (Straight talking, there’s no money available for projects.)

City Treasurer Mare Vae Reyes said the coronavirus disease (Covid-19) pandemic had resulted in lower revenue collection.

In 2021, the City was able to collect only P7.36 billion in revenues, but the money that went to expenses reached P10.27 billion.

It had the same fate in 2020 when the City collected only P8.73 billion but its expenses were at P10.38 billion.

Reyes explained that the pandemic had affected businesses, leading to a significantly low collection of business taxes.

The city government was also obliged to shell out money, especially in addressing the consequences of the pandemic that troubled the lives of its constituents.

SRP revenue

The LFC noted in its report that one of the reasons for the lack of funds is that accumulated revenues from the sale of South Road Properties (SRP) lots had been spent in the first quarter of 2021.

The city government received a total of P18 billion from 2015 to 2019, but the spending began only during the term of the late mayor Edgardo Labella.

Rosell said the funds were utilized to cover the city’s annual budgets as well as supplemental budgets. According to Rosell, when Rama assumed office in 2022, the SRP lot sales funds had been completely exhausted.

Recommendations

The LFC has proposed several measures to address the financial struggles of the city, one of which is to increase taxes.

These include business taxes, real property taxes, fees, and other charges that the city government can collect.

Reyes said the city’s tax code has not been updated since 2003 and it is now timely to revisit the code and implement an increase.

However, Reyes said the increase will not immediately be imposed without consulting the general public and the stakeholders who will be greatly affected.

The LFC also recommended that the city government review ordinances and contracts under joint venture agreements.

The committee advised that a review of properties which were auctioned and sold to the city government be done to find out if these are viable to be leased or sold.