South Cotabato, power coop to sign compromise deal for P73-M unpaid realty taxes
June 26, 2012 9:56 pm
GENERAL SANTOS CITY, June 26 The provincial government of South Cotabato and power distribution utility South Cotabato I Electric Cooperative (Socoteco I) are set to forge an agreement that will facilitate the settlement of the latters unpaid real property taxes that already piled up to P73 million.
Alfredo Dumanig, land tax division chief of the Provincial Treasurers Office, said Tuesday Socoteco I has finally agreed to settle its unpaid realty taxes and accumulated penalties through a compromise deal.
He said the local government finalized the compromise agreement, which he described as a win-win for both parties, following months of negotiations with the Socoteco I management.
Dumanig said the agreement will be signed after the scheduled payment this week by Socoteco I of an initial P6.5 million out of its principal tax dues of about P45 million.
Under the proposed agreement, Socoteco I will settle its tax dues with the provincial government on a staggered basis.
Beginning August, he said the electric cooperative will pay the local government some P3,170,054 every month until July next year.
By the end of the year, the provincial government is expected to collect a total of P22 million from Socoteco I out of its principal tax dues.
Dumanig said the agreement also provides that Socoteco I will settle its accumulated tax penalties and surcharges amounting to P28 million in a 15-year period or a total payment of P1.9 million annually.
We did not insist on charging them high in this agreement because these will translate to high recovery rates, which they would pass on to local power consumers later on, he said.
Because of the compromise deal, Socoteco I would only charge an additional 16 centavos to the areas basic power rates for the repayment of its unpaid taxes.
Socoteco I earlier explored the possibility of obtaining a bank loan to pay for its tax dues but later dropped such plans after finalizing the compromise deal with the provincial government.
South Cotabato board member Ervin Luntao, chair of the provincial boards ways and means committee, noted that the settlement of Socotecos unpaid tax obligations will practically offset the P36-million cut on the provinces Internal Revenue Allotment or IRA share from the national government this year.
The IRA of local government units represents 40 percent of the national internal revenue taxes collected in the third fiscal year before the current fiscal year.
The provincial government earlier set some belt-tightening measures after it received a notice from the Department of Budget and Management that it will only receive an IRA share of P751 million for 2012 which is down by P36 million from last years P787.8-million allotment.
As a result, Provincial Treasurer Elvira Rafael said the local government decided to cut on its maintenance and other operating expenses, specifically provisions for office supplies, gasoline, oil and lubricants, electricity and water consumptions, among others.(PNA) LAP/AVE/AC/utb