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Tax reform key to sustaining Baguio’s improved services
by Aileen Refuerzo

TOP TAXPAYER — Mall operator SM City Baguio is one of the top business taxpayers in the city while its SM Prime Holdings Inc. and SM Investments Corp. are top real estate taxpayers. -- Harley Palangchao

 
Taxes are the lifeblood of the government.”

Hackneyed but true to this day.

Taxes are essential. Without these, the government cannot build school buildings, roads, bridges, and hospitals and pay teachers, policemen, doctors, nurses, and personnel to deliver service to the public.

Over the centuries, people have come to accept this as the norm but then when faced with the prospect of increased government levies, the same people readily assume the fighting stance. In fact, Wikipedia says tax resistance existed the very day taxes were imposed.

In the City of Baguio, the debate on whether or not to increase the antiquated business and real property taxes remains a cliffhanger.

Since his re-assumption as city executive in 2010, Mayor Mauricio Domogan has pushed for the updating of the obsolete schedule of business and real property taxes to comply with the law.

Every year, the mayor included the aim to maximize revenues through the proposed revision of the Tax Code and schedule of real property values in the economic thrust of his administration, to no avail. Until now, the proposal remained at the backburner largely due to political considerations.

Humanitarian vs Obligatory

One reason why the city stalled in updating its business and real property taxes that long was humanitarian consideration.

“We have always considered the plight and sentiments of our people,” the mayor said.

“But we cannot continue to discount the need to implement the new schedule of tax rates because it is our mandate,” the mayor said.

The city is mandated to undertake a general tax revision of real properties every three years and the business taxes every five years as per provisions of the New Local Government Code or Republic Act 7160.

If religiously followed, then the city should have implemented the realty tax revisions for seven times now since 1996 and the business tax three times since 2001.

“If the failure to implement tax increase were to be the basis for the dismissal of public officials and employees, then we will all be dismissed for being remiss in our duty,” the mayor said.

When the city implemented the realty tax revision in 1996, it was met by protests from taxpayers prompting the city government to impose the increase on a staggered basis spread out from 1997 to 1999.

In 2001, the city government adopted Tax Ordinance 2000-001 which imposed lower assessment levels for real properties that tempered the increase and eventually appeased the taxpayers.

Since then, the city has not implemented another adjustment.

As a result of the city’s failure to comply with the revision every three years, the city was named as among those non-complying local government units by the Bureau of Local Government Finance (BLGF) while the City Assessor’s Office has received poor rating from the same agency, according to newly installed City Assessor Almaya Addawe.

“No less than the BLGF has been pointing out that we have been remiss in our responsibi-lity to update our land tax schedule and this has also been highlighted in the low score we have been getting in the tax component of our yearly competitiveness ranking,” the mayor said.

According to the BLGF-CAR, Baguio City lagged behind all the other six LGUs (in the LISTT) in the implementation of the revision.

The latest proposed schedule approved by the BLGF was submitted to the city council in 2015 at the time of retired city assessor Nilda Navarro albeit previously several others have been forwarded to the body during the time of Navarro’s predecessor Augustus Medina -- all remained untouched.

As expected, the latest increase in the market values exceeded the 1996 levels because of the length of time that the city did not implement the mandated adjustments.

To temper the huge increase, the office proposed to drastically decrease the assessment levels from the present 12 percent for residential and 35 percent for commercial and industrial to just three percent for residential and five percent for commercial and industrial properties.

Addawe said the proposed schedule is now undergoing revisions following the suggestion of Rep. Marquez Go and Mayor Domogan recently to review the stratification of the taxable areas as well as the market values to make them more appropriate.

She said this will entail having to go through the process of gathering data anew but this is the only way to capture inputs and more current sales and market data from the figures based in 2015 when the latest schedule was drafted.

EARLY BIRDS — Baguio Mayor Mauricio Domogan visits and thanks throngs of taxpayers who trooped to City Hall to pay their taxes on the first official business of the city government in 2015 with the mayor personally thanked them for religiously paying the taxes due to the city government. A special lane was offered to the elders, PWDs and to pregnant woman. -- Harley Palangchao

 
Meanwhile, the mayor also submitted to the City Council in 2015 the latest updated proposed amendments to Tax Ordinance 2000-001 which seek to impose an average increase of 10 percent on the antiquated business tax rates.

Former city treasurer Alicia Onoza said the last time the city hiked the revenue rates was in 2001 or 15 years ago. She said the city has practically imposed only a 10 percent adjustment from the 1974 rates under Ordinance 588-74 and since then, the rates have remained.

Domogan said the city has been left behind in tax charges by nearby cities like Urdaneta and Dagupan in Pangasinan and San Fernando City in La Union which levy business taxes higher by as much as 500 percent than the city.

For instance the city charges P15 for certifications and clearances while other areas collect as much as P100. For stall rentals at the fish section, the city charges P20 a month but other cities collect P78 a day.

Acting Market Superintendent Policarpio Tamayo in 2013 submitted a comparison of market rates being imposed in adjoining local government units including Dagupan City, Urdaneta City, San Fernando City, Agoo in La Union and La Trinidad in Benguet vis-à-vis the prevailing charges in Baguio and noted that the city collects “much lower” fees, rentals and other charges and even lot rentals on buildings within the market.

He said this necessitates the revision of the City Tax Ordinance which covers these fees since the city’s collections are not enough to defray the expenses for the city market which the city government shoulders including electric and water consumptions, reconstruction of burnt or dilapidated areas, salaries of personnel, equipment, demolition of stalls, improvement, drainages, canals, sidewalks, repair of buildings and others.

Assistant City Treasurer and concurrent in charge of office Alex Cabarrubias said some proposed percentage increases may appear massive but are still low when translated to their peso value including the rates on land, market and cemetery operations.

Based on their projection, the proposed increase in business and real property taxes will produce a sizeable income for the city government annually which would mean improved services to the public.

Reasonable

The mayor, who is serving his last term as city executive, again listed the tax rate adjustment as a priority thrust this year with a hope of fruition this time around.

He expressed confidence that Baguio residents will be fair enough to consider the adjustments as long as these are realistic, justifiable and are being used for their intended purpose.

He emphasized that the adjustments will be reasonable and based on the results of the series of public consultations conducted with the various sectors.

“We do not want to impose new rates just for the sake of increasing them. We want to strike up what is reasonable for both the taxpayers and the city government that is why we conducted proper consultations on the issue. We want what is just and reasonable. It is our job to ensure this,” he said.
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Benguet Electric Cooperative, Inc.
Congressman Mark O. Go
Congressman Ronald M. Cosalan
Department of Agriculture – CAR
Department of Health – CAR
Department of Tourism – CAR
Mayor Mauricio G. Domogan
Philex Mining Corporation
Philippine Veterans Bank
Pines City Colleges
PUGO Adventure
Saint Louis University
Sangguniang Panlungsond
University of Baguio

ABC360
Assumption Medical Diagnostic Center
Baguio Center Mall
Baguio Heart and Lung Diagnostic Center, Inc.
Baguio Water District
Benguet State University
Congressman Maximo B. Dalog
Cordillera Kidney Specialists, Inc.
Curamed Pharmacy
Department of Budget and Management– CAR
Department of Environment and Natural Resources – CAR
Department of Trade and Industry – CAR
Dreamforce Review and Training Center
Fabulo Beauty and Image Salon
Far East Pacific Commercial
Filipino–Japanese Foundation of Northern Luzon, Inc.
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Municipality of La Trinidad
Narda’s
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NIIT
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Philippine Science High School – CAR Campus
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The Regional Development Council – CAR
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Toni Vanilli Enterprise

 



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