P479M in penalties waived under tax amnesty

CEBU City Hall will waive at least P479 million in penalties, surcharges and interest for unpaid business taxes if the City Council approves the proposed amendments to the Cebu City Tax Code.

The proposed revision was tackled on second reading during the City Council’s regular session last Tuesday, Nov. 26, 2019.

Councilor Raymond Garcia, who chairs the City Council’s committee on laws, penned the revision as a way to unburden some taxpayers who reportedly “had a difficult time paying their taxes due to the rates of interests, penalties and surcharges imposed which they find burdensome.”

Once the revision is enacted, erring taxpayers will be able to clear their records from City Hall any delinquencies by paying a compromise penalty of 20 percent of all unpaid local taxes, fees and charges.

“The amnesty contemplated and granted by this Ordinance shall apply to the interests, penalties and charges on all kinds of taxes, such as but not limited to real property taxes, business taxes, community taxes, and such other fees and charges imposed by the City Government,” according to Section 3 of Garcia’s proposed Tax Amnesty Ordinance.

Lawyer Jerone Castillo, acting City Treasurer, said Garcia’s proposed amendment to the city’s tax code aims to ease the burdens of businessmen.

“In line with the concept of Mayor Edgardo Labella to really ease up everything for businessmen and the taxpayers, that is why the amnesty program was pushed. Instead of maximum 72 percent interest or 25 percent surcharge or vice versa, it will become a straightcut penalty of 20 percent. The penalty will still be there, but it won’t be the maximum,” Castillo said in a mix of Cebuano and English.

Based on data from the City Treasurer’s Office (CTO), more than 1,000 business establishments that owe the city around P679 million worth of tax penalties and surcharges since 2014 are expected to benefit from the proposed tax amnesty ordinance.

Castillo said the P679 million will remain uncollected unless the city government implements a concrete solution to the matter.

If the proposed amendment is approved by the Council, taxpayers will be required to pay their tax delinquency within a year after the ordinance takes effect, according to Section 5, Paragraph B.

Castillo said they expect at least 20 to 25 percent of the collected proceeds from the tax amnesty to be added to the P3.5 billion that the City earned this year from taxes alone.

Overall, the City will be able to collect a total of P7.9 billion, including P1.9 billion from the Internal Revenue Allotment (IRA), P1 billion from the joint venture agreement of the South Road Properties, P1.1 billion from nontax revenues and P250 million from the city’s ecozone.

Cebu City Mayor Edgardo Labella

earlier sought the approval of a proposed P10.2 billion annual budget for next year, which Castillo said is easily attainable because they expect an increase in all aspects of their collection, from business taxes and real property taxes, to non-tax revenues, IRA and other types of income from the city next year.

Separately, officials of the Cebu Chamber of Commerce and Industry (CCCI) said the proposed tax amnesty ordinance is a good mechanism to help improve competition and reduce the costs of doing business.

Virgilio Espeleta, CCCI president, praised the mayor and his administration for initiating steps to help Cebu’s business community survive and grow.