Thursday, March 06, 2008 Committee to study creation of tax-free private ecozones By Danilo V. Adorador III
A CITY Council ad hoc committee has been formed to study the creation of several tax-free private economic zones in Cagayan de Oro and its effects to the local coffers.
But the inquiry, which has yet to start, comes only after one of the city's biggest taxpayers had been declared an economic zone-effectively chipping away over P50 million in taxes in the city's purse.
Headed by Councilor Emmanuel D. Abejuela, the special committee is composed of City Finance Department officials, who were ignored when the 14th City Council endorsed the conversion of Del Monte Philippines Inc. (DMPI) into an economic zone last year.
DMPI's tax-exempt status, which started in November 2007 when the Philippine Economic Zone Authority (PEZA) declared it an ecozone, has created a stir among local officials when it was learned that it would no longer be obliged to pay P54 million assessed taxes for this year.
Apparently displeased, Mayor Constantino Jaraula said he will push for the revocation of DMPI's tax-exempt status, noting that its ecozone declaration reeks of fraud.
Councilor Simeon Licayan, finance and ways and means committee chairman, said the adhoc committee is expected to submit its report and recommendations a month after it was created Last February 19.
Licayan stressed the committee's creation was a corrective move on the part of the City Council, whose current members also endorsed the ecozone applications of four other business establishments barely few months after a similar approval was granted to DMPI.
City Treasurer Lino Daral earlier said that not a single consultation with City Finance officials was conducted on all these endorsements.
"Should all these four tax-paying establishments are granted ecozone status in consequence if the City Council's consent, the estimated decrease of revenues would reach P100 million," Daral said.
He said local revenues account for 60 percent of the total income of the city.
Daral said all ecozone applications should be nipped in the bud at the City Council level, noting that upper government agencies normally base their evaluation on the endorsements of the local legislative body.
At the very least, a study should have been made before the councilors gave their consent, he said, lest the city is "deprived of the rightful revenues."
Licayan agreed, admitting that a review committee should have been formed before the City Council acted all the applications.
