City waives tax penalties

CEBU, Philippines — The Cebu City Government is waiving the penalties of delinquent taxpayers to encourage constituents to pay their principal taxes on real properties within a two-year amnesty period.

Mayor Raymond Alvin Garcia has issued an Executive Order (EO) granting a two-year amnesty to all delinquent taxpayers.

Garcia made the announcement during a press conference on Monday, November 18, 2024, following the implementation of Republic Act No. 12001, also known as the Real Property Valuation and Assessment Reform Act (RPVARA).

It was in the same day that Garcia signed the EO 22 to implement Section 30 of RA 12001 which is also titled "An Executive Order Implementing Section 30 Of Republic Act No. 12001, Granting Tax Amnesty on Penalties, Surcharges, And Interests for Unpaid Real Property Taxes, Including Unpaid Special Education Fund, Idle Land Tax, And Other Special Levy Taxes in The City of Cebu."

He explained that for those who have RPTs in Cebu City, particularly on land and machinery, and were not able to pay for the previous years thus penalized with surcharges, the amnesty means a two year time frame will be granted where taxpayers will only pay the principal amount and surcharges will be waived.

The two-year reprieve began on July 5, 2024, and will last until July 4, 2026.

“So, I am encouraging taxpayers who are delinquent in paying their Real Property Taxes (RPT) to come to city hall and pay their obligations because we are waiving all penalties, all surcharges, and all they have to pay is the principal amount,” said Garcia.

In line with this, Garcia hopes taxpayers will take advantage of the amnesty. He added that among the reasons that taxpayers refuse to pay their corresponding taxes is because of the penalty that has soared higher than their principal amount.

Garcia clarified that there is no specific year of delinquency required in order to avail of the amnesty. With this thrust, Garcia said this will help increase the revenue of the city as the amnesty is expected to entice more taxpayers who will take advantage of its implementation.

When he was still a councilor, Garcia said he filed the ordinance of granting tax amnesty wherein the revenues of Cebu City have soared by P400 million around 2019. This was also entitled as the “Tax Amnesty Ordinance of 2019” which is an ordinance granting amnesty to taxpayers on interests, penalties, and surcharges arising from their failure to pay real property taxes, business taxes, and all other fees and charges due and demandable.

Garcia, however, clarified that the amnesty only covers for RPT.

“One peso today is better than the ten pesos tomorrow, and tomorrow you are not even sure if you can collect that amount, it’s good that you have the cash now so that you can allocate it for public service, rather than ten years after sila mubayad,” said Garcia elaborating on the wisdom of paying the taxes on time regardless of the amount.

Further, Garcia said that as this includes the mandate of the Real Property Valuation and Assessment RPVARA law, its other provision, which is the revision of the RPT tax rates, will follow after two years.

It was reported that with the newly signed RPVARA Reform Act (RPVARA), the Local Government Unit (LGU) is no longer responsible for updating the absolute values on which the new tax rates are based but the Bureau of Local Government Finance (BLGF).

“But we have to wait for the two years to lapse then diha pa ta musulod sa absolute values..after na na sa Amnesty,” said Garcia.

It was on  June 13, 2024 when President Ferdinand Marcos, Jr. signed the RPVARA, which aims to standardize, streamline, and enhance the country’s valuation and assessment of real property through a uniform appraisal that is compliant with international standards.

It has also superseded the supposed ordinance on the revision of the RPT rates of Cebu City since it hasn't been updated since 2003.

With this amnesty, Garcia said the RPT payers are given a chance to pay their taxes without the penalties.

As for the proposed P18 billion annual budget for 2025, Garcia said they do not necessarily rely on the result of this effort to back their source of funds.

“If it will increase the budget collection next year, then good, it may exceed our targets for next year sa atong income or atong revenues, so if it will exceed, we will have a basis or naa koy fund for a Supplemental Budget,” said Garcia.

It was reported that despite proposing a reduced annual budget for 2025 of P17 billion compared to last year’s P50 billion approved sum, there is no certainty yet that the council may approve the same after finding no clarity yet on its source of funds.

Councilor Noel Wenceslao, chairman of the Committee on Budget and Finance, was quoted saying said following a marathon budget hearing where they highlighted that they may have to evaluate the sources of funds to back the budget proposal and align it to the projected revenue of next year.

Wenceslao admitted that there is a possibility that the current income of the city will not be enough to back the proposed budget.

According to Wenceslao, among those being looked at to back the source of funds is the account on the collection for the RPT and the efforts to extract the collectibles of the delinquent taxpayers.

As of October 31, 2024, Wenceslao echoed that the CTO has a total collection of P8 billion which is comparable to last year’s collection for the whole year which is at the same sum but already for the whole year.

To be able to avail of the amnesty, taxpayers are required to submit a written application for amnesty to the City Treasurer's Office (CTO). The CTO then shall compute the total amount of basic RPT due, excluding penalties, surcharges, and interests.

The EO, however, noted that the payment of the computed basic RPT due must be made in full before the deadline to qualify for the amnesty. — (FREEMAN)