EXPLAINER: Mayor Mike Rama's rep Jerone Castillo argues the huge realty tax increase won't exceed legal limit. But bulky tax burden all at once can be like sledgehammer on some taxpayers. Rama's mission to make the city 'Singapore-like' is the excuse. 'Hinay-hinay lang,' councilors caution.

THE Cebu City Council has been conducting public hearings for three days already -- November 17, 18, and 21 -- and will cap it next Monday, November 28, 2002 -- on proposed tax increases on real estate, permit fees and regulatory fees in the city.

Real estate taxes are getting the most heated discussion. The public hearing last Monday (November 21) brought out formally Mayor Mike Rama's arguments for the raising of taxes and some councilors' reluctance, if not outright opposition.

CONSENSUS. An emerging consensus among councilors: a staggered increase in the next few years to lessen the suffering of taxpayers. And opposition has yet to be expressed openly and directly against the "Singapore-like Cebu City" mission that's being used to justify the tax increases and the P50 billion budget for next year. Perhaps, the hearings on the 2023 general appropriation ordinance next week will draw that out.

CITY CAN LEGALLY DO IT. Raising real property taxes 10 times more or so than the present rates is lawful, Atty. Jerone Castillo, mayor's assistant on fiscal reforms, said in Monday's public hearing on the 2022 Revised Omnibus Revenue Code of Cebu City, a bundle of tax increases in one ordinance.

He said that so many times, he sounded like telling us repeatedly that it was a good thing the mayor's office isn't going beyond the tax rate limit, as if it were a big favor to taxpayers. Like, in Cebuano-Bisaya prose, "Maayo gani gisagpa ra, wa santakoha" (good it was just a slapping, not a beating up).

Councilors Mary Ann de los Santos (BOPK) and Rey Gealon (Barug) didn't find that consoling. They worried over people who own small parcels of land, could barely make ends meet and wouldn't have enough cash even to make repairs on their dwelling.

De los Santos talked about a Laguerta, Lahug resident who has been paying P435 a year and would've to pay more than P17,000 when the increase would take effect. He and other people similarly situated -- they own land but are no longer earning income beyond daily subsistence with none for emergencies -- could lose their property.

Earlier, Gealon said that because of the hefty increase, we need "to take a second hard look and seriously contemplate ...whether it is legally and morally just and reasonably, especially at this time."

'SIPYAT SA GOBYERNO.' The City could've made so many revisions or increases, every three years, during the past 16 years or so but did not. Now the mayor's office has bundled up all those increases that weren't made and would unload them on the taxpayers.

At an earlier public hearing, last Friday November 18, Councilor Gealon said: "Ang sipyat sa gobyerno" (the City Government's fault) is now creating this big problem on property owners. For emphasis, Gealon pounded his desk or seat.

WHERE ARGUMENTS FAIL. Or suck or, without being resolved, bewilder the public, such as when:

[1] Castillo argued that other local government units ("tax jurisdictions") have higher tax rates than Cebu City. But those LGUs, such as Manila and Quezon City, made their increases gradually through the years. Staggered, the tax hike was less painful and more bearable.

[2] The mayor's representative said the push for the tax increase is mainly to widen the tax base, that is, to make those who're not paying anything to pay their taxes. Councilor de los Santos said the City had a poor record of collection in 2020 to 2021. Could they make the non-payers pay now when the City, along with many other parts of the country, is still recovering from effects of the pandemic while being battered by inflation and other economic woes? Would the tax collectors be more efficient collecting higher taxes than lower taxes? A more plausible explanation is that the tax increase would be used to make up for shortfall from the narrow tax base.

[3] Castillo said that everyone will be hurt by the proposed increases. You, me, everyone, Castillo said, almost grandly. Councilor de los Santos said the size of the increase and presumably its purpose are "unrealistic." She worried over Laguerta landowners. But she didn't directly call out Castillo that not all landowners are equal because not everyone has the money to pay big amounts of taxes. Not all are earning income from their property or elsewhere; the land could be in fact their only valuable asset, without which they'd be homeless.

Except for the Laguerta example, de los Santos and Gealon didn't yet have hard data on such matters as the number of landowners who couldn't bear the tax increase, who're not paying and why.

IS IT OPPRESSIVE, CONFISCATORY? The tax rate the City seeks to adopt won't be "oppressive" or "confiscatory" because, Castillo said, the rates are fixed by law, which through the years has not been challenged in court.

The rates, which are the benchmarks in the Local Government Code of 1991, may not be oppressive or confiscatory but they may become so because of the manner they are enforced. In one package, not in phases or installments ("gibolto, wa itagi-tagi"). Landowners who can't raise the tax money might lose their land.

THE PROCESS OR PROCEDURE. Councilors questioned the result of consultations made by the mayor's office, including a claimed meeting among barangay captains. It was held without his participation, Association of Barangay Councils (ABC) chief Franklyn Ong said. Not all barangay captains might have participated, said de los Santos, and they didn't have time to consult barangay residents. Castillo conceded they still have to meet with an assembly in two barangays.

On "premature" deliberation by the City Council, Majority Floor Leader Jocelyn Pesquera feared the Sanggunian might vote for the increases, only to learn later that the ordinance-to-be was being opposed. Proponents in the executive department could say it was the City Council, not they, that decided. Pesquera said that would be "passing the buck" and doing "another Pontius Pilate" (a mix of idioms from Truman days in the US and the biblical times).

In response, Castillo said "this is (the public hearing) already part of the process." What we've learned from our own surveys and what you've learned from your public hearings, he told the Sanggunian, should help produce the version acceptable to the people.

RESULTS CAN MISLEAD, as the initial reaction to the tax proposals must have misled the mayor's office. Castillo almost swore there was “no opposition” in their initial exploration of public mood about the tax increases. A number of councilors were skeptical.

Even Councilor Noel Wenceslao, chairman of the committee on budget and finance, conceded that some people wouldn't react until they know the amount of the increase.

The numbers reported so far: "possible 300 to 400 percent increase," then 700 percent to 1000 percent, depending on the rise of market value of the property, the location and its development. Wenceslao saw "an impending increase in the appraisal and assessment value of all real properties in the city by up to 50 percent of their current values." Still, the numbers don't make their full impact until the taxpayer knows exactly how much more tax he'll have to pay.

[Next: The 'noble mission' for which the tax increases are made.]