COA: Pasay lost because of tax write-off

The Pasay City government has lost over 1500 million because of the unauthorized condonation of real estate tax arrears and other irregularities, the Commission on Audit has disclosed.

In its 2015 audit report for the Pasay city government, COA chided city officials for writing off debts in real estate taxes of “various individual taxpayers and government-owned or controlled corporations that resulted in the understatement of the account to some 1868.303 million.”

“Payments of other taxpayers were fraudulently recorded as payments of delinquent taxpayers,” COA also noted as it examined randomly selected five samples of real estate payments.

For the five transactions alone, the Pasay government already lost 1328,087.01 in “foregone collections.”

The audit agency said that in 2009, the city’s Management Information and Technology Services had assured that controls were in place to prevent similar issues from happening again.

“Despite of that statement, however, we were able to validate that manipulation of taxpayers’ records in the system still exists as discovered in this current audit. Official Receipts issued to other taxpayers were still used to update the Payment Records of several delinquent taxpayers in the RPTAS,” COA said.

It found that five of the 25 random samples, or 20 percent, had this discrepancy. It said “there is a probability that 20 percent of the remaining population could have the same discrepancies in the tax records. This could equate to a higher amount of taxes in arrears that were manipulated,” COA said.

The unauthorized writing off of arrears was validated by a letter from the city treasurer, COA said.

The letter contained computations of tax arrears of the Philippine Economic Zone Authority; Social Security System; HK Investment Group/SSS; Light Rail Transit Authority, Department of Trade and INdustry, Government Security Insurance System and the city government itself.

The decision to condone unpaid taxes was apparently “made in the belief that GOCCs are exempt from payment of real property taxes,” COA said.

The Local Government Code has withdrawn exemptions from payment of real property taxes, it added.

Should a GOCC insist on the exemption, it should provide the city government “unequivocal proof of exemption, incentive or relief granted,” the audit body said.

If no evidence is presented, the real property tax must be included in the list of real property taxpayers,” said COA.

The write-off of the taxes receivables “worked as a condonation in favor of the delinquent taxpayers. This is contrary to law,” said COA.