Pact eyed with telecoms for taxes

Posted on November 25, 2012


The Cebu City government will have to renew its Memorandum of Agreement (MOA) with telecom companies to compel them to pay taxes and help raise the city’s revenue generation efforts to fund Mayor Michael Rama’s P6.7 billion budget next year.

City Administrator Jose Marie Poblete said the three-year MOA with Globe, Smart and Digitel already expired last March.

This was one of the reasons cited by the City Treasurers Office (CTO) for its failure to reach their P300 million collection target for its other income receipts account.

As of October 31, the CTO only collected P135 million of the P300 million collection target which consists mostly of collections from interest earned from the city’s bank deposits and compromise payments from the telecom companies.

CTO is projecting a P343 million collection from the city’s income and other receipts account next year.

“We already sent them letters telling them that we need to sign a new MOA. We’re just discussing how much we will be collecting as increase in taxes. They want to pay the same amout but we will not allow that since they already managed to get new subscribers in the city,” Poblete told the city council in last Friday’s budget hearing.

The City Council’s budget committee started poring over Rama’s budget proposal. In last Friday’s hearing, the city’s finance executives were grilled on where they expect to get the funds.

“We are looking at the source of funding first because the source of funding will determine the rest,” Councilor Margot Osmena, who chairs the budget committee, said..

Administrator Poblete told the council that the city government had been collecting at least P20 million per year in the last three years from each of the three telecom companies but their MOA with the city already expired last March.

Osmeña said it would also help if the city goverrnment will pre-terminate its time deposits with the Land Bank of the Philippines, the Philippine Postal Savings Bank and the Philippine Veterans Bank in order to make more funds available for its use.

The city government placed about P600 million of its cash on time deposit, some of which will expire on 2015 and are earning an interest of P50 million per year.

But Poblete argued that the city will lose its interest earnings if they pre-terminate the time deposits.

He also said that the pre-termination process has a corresponding fee. /Chief of Reporters Doris C. Bongcac

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