No ‘common ground’ yet on tax increases

ACTING Cebu City Mayor Raymond Alvin Garcia hopes that the executive and legislative branches of City Hall can find a “common ground” on the level of tax increase that should be implemented in 2023.

Garcia told SunStar Cebu Thursday, Nov. 24, 2022, that most of the councilors are not against the tax revision but what they are opposing is the amount of the increase.

He also said disagreements on the rate of the tax increase should not delay the public hearings for the 2023 annual budget.

“Everybody agrees that there should be a revision. However, we have not yet reached common ground on the exact amount of the increase,” said Garcia.

Frequent meetings among the councilors will be called to discuss what a reasonable rate would be for the increase considering that businesses and the general public are still trying to bounce back from the Covid-19 pandemic, he said.

Garcia is acting mayor since Mayor Michael Rama is in Singapore with his family for a vacation and will be back in Cebu on Nov. 28 yet.

During the public hearing last Nov. 21 on Councilor Noel Wenceslao’s proposed ordinance for the revision of the city’s tax code, several councilors expressed their concerns over the proposed increase which they deemed “excessive and oppressive” to the people.

Wenceslao, chairman of the committee on budget and finance, has said the increase in the real property tax would be dependent on the fair market value wherein some properties may experience an up to 7,000 percent increase in their taxes. Yet, this still would not be enough to achieve the P50 billion proposed budget of Rama for 2023.

Lawyer Jerone Castillo, special assistant of Rama for fiscal matters and special projects, explained during the public hearing that the increase is necessary to fund the Singapore-like vision of Rama for the city.

Garcia clarified that despite the councilors’ showing of disapproval of the proposed rate, the relationship between the executive and legislative departments remains good.

“There is no problem with the relationship between the executive and the legislative because we are in agreement because after all, we have only one objective and that is for the betterment of the City of Cebu. There is no argument on that,” said Garcia.

2023 budget

According to Garcia, the public hearing for the 2023 annual budget should not be delayed just because the council has not given its approval yet on the proposed revision of the tax code.

He acknowledged the sentiments of some councilors that the tax increase will determine how much revenue the city can generate for next year and that there are still questions on whether this will be sufficient to achieve Rama’s proposed P50 billion budget for 2023.

However, Garcia said the public hearing for the budget should begin on Monday, Nov. 28 since the subject matter is time consuming, especially since representatives from all City Hall departments will have to appear before the City Council to defend their respective proposed budgets.

The City Council can skip the discussions about the revenue and tackle first the expenses that the City Government will incur for next year, he said.

Source of funds

In a previous interview, budget and finance committee chairman Councilor Noel Wenceslao said the P50 billion proposed budget for 2023 cannot be achieved if the City Government will just rely on increasing its taxes.

Garcia also agreed with Wenceslao that the city should look for other sources of income or have projects realized by engaging in private-public partnerships.

Another option is for the city to take out loans, but Garcia said this is far from Rama’s mind for now.

After 27 years, it was only last August that Cebu City finally became “debt-free” after it released nearly P905 million for the final payment of its loan for the development of the South Road Properties.

Garcia also believes that it doesn’t matter whether the city can raise P50 billion or not as long as the priority projects of Rama’s administration will be funded.

“Let us say we can only hit P30 billion. Then all the mayor has to do is prioritize the programs to be funded by his P30 billion,” said Garcia.(IRT)