Cebu City property owners to face real estate tax hike

Real property owners in Cebu City should expect a huge hike in their real estate taxes soon if the city government will finally heed a Commission on Audit recommendation for the general revision of  assessments of real property in the city.

COA disclosed in the 2019 annual audit report for Cebu City that the city government has been ignoring provisions of Republic Act 7160 or the Local Government Code by not undertaking a general revision of real property assessment since 2003.

As a result, the city government’s “revenue raising power was not maximized”  thus, preventing it from earning additional income to finance projects for the welfare of city folk.

Reacting to the adverse COA findings, the city assessor “justified that the policy direction of the City Mayor is the efficient collection of taxes” but not imposing taxes to increase revenues.

COA said RA 7160 provides general revision of real property assessments should be undertaken every three years.   Real properties should be appraised at the current and fair market value prevailing in the locality where the property is located.

Since fair market value of properties tend to progress in time, assessed value of properties will expectedly increase. This results to adjustments in real property taxes imposed on a certain property.

The last time the city council enacted an ordinance for the general revision of property values was in 2003.  

The audit agency said revisions should have been undertaken in 2006, 2009, 2012, 2015 and 2018.

“Considering the number of years that no revision of assessment was conducted, the revenue raising power of the City was not maximized since the SMV (schedule of market value) was no longer reflective of the true values of the properties,”COA stated.

Auditors added: “Consequently  it prevents the city from earning additional income to be used for project that could have benefited the general public.”

Audit examiners disclosed that Cebu City is not the only LGU that has not been complying with the provisions of RA 7160 on revision of realty assessment.  Only 28 percent of provinces and 22 percent of cities conduct  a general revision of Schedule of Market Values every three years, they revealed.

This information prompted the Department of Interior and local Government and Department of Finance to issue JMC No. 2010-01 in 2010 to enjoin all cities to prepare Schedules of Market Values of Real Property and conduct general revision of property assessments as provided by law.

“Despite the issuance of the JMC, the City still did not undertake a general revision of real property in 2012.  Such non-compliance was cited in our AAR for CY 2012 and was reiterated in our report for CY 2014,” COA noted.

In the same audit report, COA questioned the grant of honoraria and allowances totaling P25,379,308.00 to Gender and Development focal persons, drivers, and loaders and Sangguniang Kabataan officials of its 80 barangay units in 2019.

Auditors said the grant of allowances is violative of Section 95 of RA 7160 on “double compensation.”

During the exit conference, the city government stressed that under RA 7160, the city may give additional honoraria if its finances would permit.”

Reacting to the city government’s justification, auditors said the Department of Budget and Management prohibits the grant of additional compensation to barangay officials and employes.