Councilor proposes tax amnesty as City’s tax collections decline

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CEBU City's tax collection for the first quarter of 2020 has dropped to P297 million from the P910 million collected in the same period in 2019.

This is a 67.36 percent decrease in collection.

The P297 million was collected from business tax and real property tax.

To cope with the shortfall, City Councilor Raymond Alvin Garcia will reintroduce the tax amnesty ordinance to help taxpayers who are having difficulty in paying their tax dues.

The collection of tax dues was affected by the crisis brought about by the coronavirus disease 2019 (Covid-19) pandemic.

The pandemic has forced temporary closures of government operations as well as shut down some establishments, which resulted in many layoffs.

Jerone Castillo, special adviser to the mayor on finance matters, said the low collection will have an impact on the City’s ability to collect its 2020 target of P9 billion.

“If the trend will continue, there will be difficulty on the City to meet its collection benchmarks,” said Castillo.

In a previous interview, Castillo said some projects and programs of the mayor might be sacrificed if the low tax collection continued.

As the City recently extended the deadline for the payment of business and real property taxes, Garcia, chairman of the committee on budget and finance, said business taxpayers have until July 20 to pay their tax dues for the second and third quarter, while real property taxpayers have until July 31 to pay for the first and second quarter.

The City initially extended tax collection until June 30, but since the entire city was on enhanced community quarantine (ECQ), it further extended the tax collection to July.

Garcia, though, hoped Cebu City would overcome this crisis once businesses resumed operations.

He said the low turnout of tax collection was expected due to the health crisis.

“It’s about a P600 million shortfall. Well, that is expected. We’re closed many businesses are closed. On the part of the City, we only have a skeletal workforce. Obviously, we weren’t able to collect taxes properly,” Garcia said in a mix of Cebuano and English.

The satellite office of the CTO at the SM City Cebu is also closed, he said.

Garcia said the shortfall will not affect the City’s budget in fighting against the Covid-19 crisis, but the low tax collection will affect the annual budget for 2021.

He said the City can source funds for a supplemental budget from its savings or from a South Road Properties sale, adding that the City can also realign budgets.

Help for taxpayers

Meanwhile, Garcia said it is high time to push for a tax amnesty to help taxpayers.

“I want taxpayers to get help. They are all having a hard time now and in order for us to help, let’s have this amnesty,” he said in a mix of Cebuano and English.

The tax amnesty ordinance, which the City Council deferred more than three times, will allow delinquent taxpayers to only pay 20 percent of their total penalty.

Garcia originally proposed a 20 percent payment of surcharges and interest, but decided on 10 percent.

“Under the tax amnesty ordinance, if the taxpayer owes P100,000 for his or her property and another P100,000 for the interest, the taxpayer only needs to pay P110,000,” he said.

He said it is a burden, especially during this crisis, for taxpayers to pay their tax dues, adding that the interest or the penalty increases for every month the taxpayers fail to pay.

Garcia said the tax amnesty will encourage people and business to pay their taxes.

“By reducing their penalties, the City can help them. At the same time, they’ll be inclined to avail themselves of the amnesty and pay their taxes,” he said in a mix of Cebuano and English.

In 2019, some city councilors expressed doubts on the proposed “Tax Amnesty Ordinance of 2019,” which prompted the council to defer it a number of times.


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