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Pagadian City 2008 COA Value for Money Audit

July 1, 2010

II. Value for Money Audit:
6. The rates of the tax ordinance of the City Government had been unadjusted for almost 15 years depriving millions of collections which may have been utilized for developmental projects.

Sec. 191 of  R.A. 7160, which provides authority to Local Government Units to adjust  rates  of  Tax  Ordinances, states that:
“Local  government  units  shall  have  the authority to adjust the tax rates as prescribed herein not oftener than once every five (5) years, but in no case shall such adjustment exceed ten percent (10%) of the rates fixed under this Code.
Review of  revenues collected by the City Government of Pagadian from CY 1994 to CY 2008,  disclosed that the tax rates used  in the  assessment, collection, and  payment of taxes, fees, charges and other  impositions  for services rendered were still based on City Ordinance No. 93-117  which  was  approved on December 29, 1993.    This  City  Ordinance  had  been implemented  without revision for already 15 years now.
The approximate income of this Office should the same been adjusted providing the allowable 10 percent increase of tax rates in every after five years should have been millions. This fund could had been used to develop city streets, alleys, improved garbage maintenance and other developmental priorities of the City.
When we had a talked with the City Treasurer, this Office was informed that the proposed revision of the City Revenue Code had been unacted in the legislature for already six years. However, we have knowledge that the present Sangguniang Panlungsod is undergoing public hearing regarding the revision of the 1993 Revenue Code. The same issue was also taken up in the Executive Legislative Agenda formulation held on October 2-4, 2008.

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Management comments:
The City Treasurer during the exit conference on February 12, 2009 admitted that the tax rate of the City Government had not been adjusted for almost 15 years. A tax measure is now discussed by the Sannguniang Panlungsod, increasing the rates of taxes. It is already on its third reading. Public hearing was already conducted. If this Tax Ordinance will be approved business taxes and other taxes will be implemented definitely
this year. The City Treasurer said that for Real Property Taxes, the increase will be implemented on staggered basis, 30% increase will be implemented this year, 60% on its second year, until the 100% increase will be fully implemented.
Recommendation to Pagadian City Government:
Make representation with the Sangguniang Panlungsod for the soonest approval of the Revenue Code. Provide some technical assistance by assigning knowledgeable personnel from the City Treasurer’s Office to assist the lawmakers in the solution of some difficult issues.

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