Findings No.2 COA Annual Audit Report 2005

July 25, 2008

2. The City Treasurer collected only P11,964,171.63 out of the real property tax dues of P24,223,724.88, both current and prior years, thus, P12,259,553.25 remained uncollected as of December 31, 2005, depriving the city of additional funds to finance its projects/programs/activities for the delivery of basic services.

One of the functions of the City Treasurer as prescribed under Section 170 of Republic Act No. 7160, is to collect taxes or revenues authorized by law.

A province, city or municipal government survives on income or revenues to carry on its financial operations. For this reason, local government units are mandated to formulate sound plans to maintain sound fiscal or financial operations, improve operating performance and realize expected results.

Section 256 of Republic Act No. 7160, otherwise known as the Local Government Code of 1991, provides that for the collection of the basic real property tax and any other levied under this Title, the local government unit concerned may avail of the remedies by administrative action through levy on real property or by judicial action.

Records showed that on May 9, 2005, the City Treasurer submitted to the City Accountant, the List of Delinquent Real Properties and List of Collectibles for the year 2005 with the corresponding tax dues on Basic and Special Education Fund for the City of Gingoog as the basis of setting up the Real Property Tax Receivables for Calendar Year 2005, as follows:

Basic Tax [1 1/8%]SEF [1%]TotalCurrent YearP 6,055,069.64 P 5,382,284.12 P 11,437,353.76Prior Years’ (Delinquent

Properties) 6,769,255.30

6,017,115.82

12,786,371.12

TOTALP 12,824,324.94 P 11,399,399.94 P 24,223,724.88

Based on the list submitted by the City Treasurer, the City Accountant has drawn the Journal Entry Voucher (JEV) to record the Real Property Tax/Special Education Tax Receivables for the Current Year 2005 amounting to P6,055,069.64 and P5,382,284.12, respectively.

Verification revealed that out of the real property tax dues of P24,223,724.88, both current and prior years’, only P11,964,171.63, basic and SEF, excluding penalties of P1,275,066.54 was collected. Thus, P12,259,553.25 remained uncollected as of December 31, 2005. Details of the aforementioned collections are as follows:

Basic RPTSEF RPTTotalCurrent Year (CY 2005)P 4,257,392.95 P 3,784,125.80 P 8,041,518.75Prior Years’ 2,076,665.65 1,845,987.23 3,922,652.88Grand TotalP 6,334,058.60 P 5,630,113.03 P 11,964,171.63

Records of the City Treasurer showed that they had been applying measures to collect delinquent real property taxes by administrative action through levy on real property. For the Calendar Year 2005, the Office of the City Treasurer sold at public auction 281 parcels of land out of the 846 warrants of levy issued. However, there were delinquent taxpayers whose taxes had been delinquent for 2 to 5 years, but were not subjected to the remedies provided in R.A. 7160. According to the Chief of the Land Tax Division of the City Treasurer’s Office, not all delinquent real properties were subjected to public auction and/or remedial measures were not strictly availed of because of lack of funds for the publication of the properties that will be auctioned, as required under the provisions of Republic Act No. 7160. Instead, they opted to auction first those properties that were delinquent since 1980.

As a result, the City was deprived of much needed funds to finance the projects/programs of the government and/or for the delivery of basic government services.

In response to our Audit Observation Memorandum, the City Treasurer justified that they have exerted efforts to collect more than their targeted RPT/SET collectibles but there are problematic tax declaration of properties that are not yet corrected/deleted on files with the City Assessor’s Office which contributed to the total real properties collectibles. But with the completion of the new special program on Inventory of All Real Properties under the City Assessor’s Office, the exact taxable real properties will be determine and this problem will be directed.

Recommendation:

Require the City Treasurer to formulate campaign strategies to collect more taxes in order to generate more funds for the delivery of basic government services. Likewise, strictly enforce the remedies by applying the administrative or judicial actions to all delinquent taxpayers.

Recording of Collections/Payments of delinquencies for Real Property Tax/Special Education Tax prior to Calendar Year 2002 were not in accordance with the provisions of the New Government Accounting System (NGAS).

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Written by admin · Filed Under Commission on Audit, Gingoog City