Higher taxes loom

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Thursday, August 21, 2014

LOOKING UP.  Changes in its reclamation area signal the growth of Mandaue City’s business sector, as this photo taken with an unmanned aerial vehicle or drone shows. (Allan Cuizon)


REAL property and business owners may have to pay the City Government of Mandaue higher taxes starting next year.

The City Council is set to pass an ordinance updating the City’s schedule of fair market values (SMV) and another ordinance raising business tax rates, with no one opposing the measures in yesterday’s public consultation.

Real property owners will have to pay higher taxes if the SMV is increased by 20 to 300 percent, depending on the property’s classification and location.

Tax rates for businesses will be increased by 10 to 60 percent.

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But lawyer and City Treasurer Regal Oliva said the increases will be staggered to give taxpayers time to adjust.

Business owners will feel the whole burden of the new tax rate in three years, while real property owners will do so in five years.

In yesterday’s consultation, Oliva explained that City officials might be held criminally and administratively liable if the city’s SMV and business tax rates remain unchanged.

“Our attention has been called by the Department of Finance and the Department of Interior and Local Government,” he said.

The City’s SMV has not been updated since 1989 while the business tax rates have not changed since 1999.

Next year

Oliva said the City’s target is to implement the increases next year.

Manufacturing firms, however, will pay the old tax rate.

Oliva explained that the City will not impose higher tax rates on manufacturing firms because of the new vision it adopted, which is to become the primary source of high-quality products in the Philippines.

Other proposed amendments in the City’s Revenue Code include the imposition of tax on car dealers and profit-oriented schools and hospitals.

With higher tax collection, Oliva said, the City will be able to deliver better services. Among others, the taxes will help the City improve the roads, implement flood-control measures and create more socialized housing projects.

He added that the proposed tax rates will not drive away investors, because these are not higher than those of other cities, including Cebu and Lapu-Lapu.

To come up with an updated SMV and business tax rates, personnel of the City Treasurer’s Office and City Assessor’s Office underwent workshops and training under the Land Administration and Management Program of the World Bank and the Bureau of Local Government Finance.

Explain reasons

Under the new SMV and business tax rates, Oliva said the City will be able to increase its real property tax collection by 50 to 60 percent and its business tax collection by 60 to 80 percent.

Councilor Diosdado Suico said they hope to enact the measures by next month, so the increases will be implemented next year.

Suico said it took the City Council several years to update the City’s SMV and its Revenue Code, out of consideration for the business sector.

“We now have been criticized for our laxity. I hope you understand our side,” he told the taxpayers attending the consultation in City Hall’s session hall.

Edna Tan, who represented manufacturing firm Joyland Industries, said she was glad the City spared manufacturing firms from the tax increase. But she said the City needs to reach out to all taxpayers and explain the reasons behind the increases.

“We want to work harmoniously with the City,” she said.

In an interview last June, Mandaue Chamber of Commerce and Industry president Philip Tan asked City officials to make sure the tax increases will lead to better services and better infrastructure, citing the city’s perennial problems with floods and rough roads.

Published in the Sun.Star Cebu newspaper on August 21, 2014.

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