Cebu City to Lose P60M revenue if Cedula Abolished

If the proposal of Bureau of Internal Revenue (BIR) Commissioner Kim Jacinto-Henares to scrap the collection of community taxes in a form of cedula would be pursued, the Cebu City government will lose close to P60 million of revenue every year, Cebu City Treasurer Emma Villarete said.

Sixty million pesos can build already four-storey 16 classrooms school buildings and other projects, but Mayor Michael Rama said the proposal of Henares can’t be implemented right away because it needs a thorough deliberation from the lawmakers in Congress.

After the enactment of Republic Act 7160 or the Local Government Code in 1991, the law allows the cities and municipalities to collect community tax from corporations and from the residents aged 18 and above who have been employed on a wage basis, including those who are required by law to file an income tax return.

The cedula or community tax was first introduced by Spanish colonizers in the 19th century to Filipinos and was used as an identification card of the people and had to be carried at all times.

In Cebu City, some barangay officials had been deputized by the City Treasurer’s Office to collect community taxes from their residents and issued them with the community tax certificates or cedulas. The barangay has a share of the collections.

Individuals who wish to avail of a basic community tax is required to pay P5 and P500 for corporations and an additional P1 tax per P1,000 of income and earnings in the preceding year, although the law provides that additional tax should not exceed P5,000 for individuals, and P10,000 for corporations.

Henares explained that while the BIR shells out millions of pesos for the printing of the Community Tax Certificates (CTC)’s forms which they will give to more than 1,000 cities and municipalities, the BIR will not gain even a single centavo from the collections.

It was reported that the BIR had a total P74.5 Billion of revenue collections for the month of February this year or an 8.5 percent more than the P68.6 Billion revenue collections recorded in February last year. But the government failed to hit the P77.1 Billion target for February.