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Tuesday, April 17, 2007
City Hall, water district fail to remit millions in taxes
By Danilo V. Adorador III
CAGAYAN DE ORO CITY -- A number of local government units (LGUs) in Northern Mindanao are not remitting taxes, and at least one government utility refused to settle tax dues that run into the millions, said an internal revenue official.
The local governments who are delinquent in remitting taxes withhold from employees are violating finance regulations, and this technically may be considered as a form of malversation, said Bureau of Internal Revenue (BIR) 10 Regional Director Mustapha Gandarosa.
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Gandarosa cited as example the failure of the Cagayan de Oro City Government to remit to the BIR around P18 million of taxes withheld from personnel since December 2005.
The newly converted city of El Salvador in Misamis Oriental also incurred the same violation but settled the matter just recently, said Gandarosa. The anomaly is also observed in other Northern Mindanao local government units, he added.
The case of the Cagayan de Oro Water District (COWD)--a government corporate entity whose bank accounts were recently "garnished" in favor of the BIR--is unique, said Atty. Nenette Epon, BIR 10 information officer.
When asked how City Hall failed to submit payments, much less information on the taxable income of City Hall employees, Epon said that procurement of documents has been difficult since 2004.
However, Gandarosa said the City Government of Cagayan de Oro is trying to update its tax payments, though at a slow pace.
Gandarosa said the delay in tax remittances could be caused by various factors, including possible misuse of the money. "Who knows?" Gandarosa replied when asked whether such scenario is possible at City Hall.
The City Accountancy office has yet to respond to the matter as of Monday afternoon.
Epon said garnishment is a proceeding under which the water district's accounts in all banks are put under BIR control. This will be lifted once the utility firm settles its tax dues.
Epon said the water district owed BIR-Northern Mindanao P341 million in accumulated taxes since 1997--obligations the water district repudiates on the alleged ground that government-owned and controlled corporations (GOCCs) are exempted from paying taxes.
However, Epon said the Marcos-era law that exempts GOCCs from tax obligations has been supplanted by Republic Act 7109, which lifted the exemption.
The water district disputed this and a case is now pending before the Department of Justice (DOJ)--an inappropriate venue since DOJ is a co-equal executive department, said Gandarosa.
Further, Gandarosa also warned erring LGUs to remit their employees' taxes on time or face civil and criminal prosecution.
He explained that the withholding tax is automatically deducted from an employee's salary, and diverting the funds to other purposes is illegal.
"Mayors, even barangay chairmen, and their treasurers and accountants are the accountable officials if taxes are not remitted on time," he added.
Gandarosa led other top BIR 10 officials in a press conference Monday, as a part of the bureau's tax campaign efforts. (Sun.Star Cagayan de Oro/Sunnex)
For more Philippine news, visit Sun.Star Cebu. (April 17, 2007 issue)
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