Lack of funds may force Cebu City to raise taxes

·2 min read

THE Cebu City Government may have to increase taxes as it doesn’t have enough funds for new projects.

The City’s local finance committee (LFC) made the disclosure during a press conference on Monday, Aug. 8, 2022.

According to lawyer Collin Rosell, Mayor Michael Rama’s secretary, the City has spent more than its income in the last two years.

He said the City’s available cash, as of June 30, was P4.54 billion, but it has payables worth P5.04 billion.

"Diritso nga pagka istorya, wala’y libre nga kwarta nga magamit kung unsa maoy proyekto (To put it bluntly, there’s not enough money for projects)," Rosell said.

City Treasurer Mare Vae Reyes said the City’s revenue collection dropped as a result of the coronavirus disease 2019 (Covid-19) pandemic.

In 2021, the City was only able to collect P7.36 billion, while expenses reached P10.27 billion, she said, adding that the same happened in 2020 when the City collected P8.73 billion, but expenses reached P10.38 billion.

Reyes said the pandemic affected businesses, which led to a significant drop in business taxes.

The City Government also shelled out money to help ease the lives of constituents who were affected by the health crisis, she said.



SRP revenue



In its report, the LCF noted that one of the reasons for the lack of funds is that accumulated revenues from the sale of lots at the South Road Properties (SRP) were spent in the first quarter of 2021.

The City Government received a total of P18 billion from 2015 to 2019, but the money was not touched until the late mayor Edgardo Labella took office in 2019.

Rosell said the funds were used to cover the City’s annual budgets, as well as supplemental budgets. By the time Rama assumed office in 2022, the money from the SRP lot sales had been exhausted, he said.



Recommendations



One of the measures the LFC proposed to address the City’s financial deficit is to raise taxes, which include business taxes and real property taxes, among others.

Reyes pointed out that the City's tax code has not been updated since 2003, saying now is the right time to implement an increase. However, he said the general public and other stakeholders will have be consulted first.

The LFC also recommended reviewing ordinances and contracts under joint-venture agreements.

The committee also advised a review of properties that had been auctioned and sold to the City Government to determine if these can be rented out or sold. (IRT)