Findings No.2 COA Annual Audit Report 2006

July 25, 2008

2. The City Treasurer failed to collect business taxes dues for Calendar Years 2005 and 2006 amounting to P785,266.33, in violation of Sections 167 of Republic Act No. 7160 and Section 4, Chapter II of the Gingoog City Tax Code of 1992, thus depriving the City Government of the opportunity to generate additional income.

Section 167 of Republic Act No. 7160, otherwise known as the Local Government Code of the Philippines, provides that unless provided in the code, all taxes, fees and charges shall be paid within the first twenty days of January or of each subsequent quarter as the case maybe.

Section 4, Chapter II of the Gingoog City Tax Code of 1992 states that it shall be the duty of the City Treasurer to collect, either by himself or through his deputies, all taxes, charges, fees and all other levies in this Ordinance.

Verification of record in the License and Fees Division of the City Treasurer’s Office disclosed that business taxes due for Calendar Years 2005 and 2006 amounting to P282,271.43 and P502,994.90, respectively were not collected by the City Treasurer.

The Chief of the License and Fees Division of the City Treasurer Office, justified that due to manpower constraint collection for CY 2006 was not collected because the division:

1. Lacks field collectors who will do the assessment at the actual place of the business establishments.

2. Lacks field collectors who will do the cash examination of the books of the businessmen to determine the truth of their business total receipt declaration.

3. Lacks motor vehicle to go around the city to catch up with the peddlers and vans, wherein they can collect taxes as provided in the tax ordinance.

Failure of the City Treasurer to collect efficiently Calendar Years 2005 and 2006 business taxes deprived the City Government of the opportunity to generate additional income to its scarce resources.

During the exit conference, the City Treasurer commented that he was not aware of the uncollected business taxes because the Chief of the License and Fees Division did not update him of the status of the uncollected business taxes. At the end, he promised compliance of the recommendations to exert more efforts for the collection of business taxes and issue demand letters to delinquent taxpayers.

Recommendation:

Instruct the City Treasurer to exert extra efforts to collect business taxes, fees and charges by enforcing tax laws and other collective measures to the fullest to maximize generation of additional income. Likewise, issue demand letters to delinquent taxpayer on business tax to compel them to pay their taxes.

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