Will taxes increase after Catbalogan's cityhood?

By TONYBOY MORALES
June 22, 2007

Does being a city entail increased burden on the people to pay higher taxes? This issue is an important issue that everybody should know. I am glad that the avid readers of Samarnews.com are now debating over the said issue. Let me remind everybody that a 5-year moratorium on tax increases is embodied in R.A. 9009, Catbalogan City organic law. Thus, there would be no tax increases during the five-year period starting on the date the law was ratified by the constituents of Catbalogan.

The caveat on tax increases

However, tax increases should be viewed in a "real" and not "nominal" sense. To illustrate let us use some hypothetical examples: First, if the business sales tax is at one-half of 1% of gross sales before the ratification of the law, the tax rate cannot be increased within the five year period. So, if businessman X earns 10,000 pesos for the year 2008, he will only pay the existing tax rate of one-half of 1% which is 50 pesos. If he earns 15,000 in 2009, he will still pay one-half of 1% of gross sales which is 75 pesos and not the 50 pesos he paid in 2008. Hence, the rates remain the same but the amount of tax paid increased due to the increased gross sales.

Second, another deviation is when the city council imposes a new tax. For example, the city deems proper to impose a new tax on those who would use public beaches, like Buri and Sunshine, because there is no existing tax at the moment. The imposition of a new tax is not viewed by law as an increase in tax because there is no existing tax from which increases are to be reckon with. So, if the city wants to earn some money outside of IRA and other incomes, to be creative is the name of the game. Thus, a new tax is not a tax increase.

Third, let us focus on property taxes which will be subject to a lot of contentions later. Property taxes are shared between the provincial and municipal government. If you are currently paying say 1,000 pesos as annual property tax as assessed by the municipal assessor and during this year you have made some significant improvements to your house that would increase its value, the assessor may increase its assessment of your house and you'll probably be paying more than what you are currently paying. Therefore, the increase is due to the increase in the value of your house while the rates remain the same.

Do not worry

For the next five years, there would be no "real" increase of tax rates in the city of Catbalogan. I guess that statement is a little bit correct. That to me is an assurance that the price we pay for a city we wanted won't bite us the moment we said yes to cityhood. Or, maybe after five years, tax increases would be unnecessary because of efficient collection of taxes, who knows. We should not be worried with things that may not come to pass.

Taxes are essentially good and the evils of taxation

However, taxes must be viewed as a necessity for an orderly society and a responsive government. The list of things that the government should do is long and taxes are important to run the turbines of government. Only corruption and tax evasion are the two evil pilfirages for the smooth running of a government system. If we can pluck these two pilfirages, the people will benefit tremendously from the services provided by the government. People are willing to pay taxes if they know where their taxes go. Taxes should go to the proper bucket and not to a corrupt pocket.