White Paper No. 15Tommy Richer, Cebuanos Poorer

How Tommy Exploited Cebu

This white paper is meant to shed light over the discussion of important politico-economic issues. It may not be reproduced, stored in a retrieval system, or transported in whole or in part or by any means – electronic, mechanical, photo-copying, recording or otherwise without prior written permission of the Philippine Institute of Applied Politics.

Rama Credited With High Tax Revenue Collection

First 10-year tenure of TOMAS OSMENA as mayor (Tax map in billions of pesos)

Revenue Position when Rama was City Council member (1992-2001)

City income very low, slow during first 10 years as mayorBusinessmen among Cebu City’s top 5,000 taxpayers, who are known to be relatives, friends, and political campaign contributors of the mayor, pay only a little more than P250 million in combined annual taxes over a 10-year period1 to the city treasury. City fortunate to have a large Internal Revenue Allotment (IRA) share of more than P300 million to cover revenue shortfalls.

Sources: Bureau of Internal Revenue annual reports to the Department of Finance, February 1988 to June 1998; Economic Intelligence and Investigation Bureau, DOF

Photo credit: GMA TV

Negative impact of political patronage:●Created a tax evasion racket protected by City Hall bureaucracy●Limited income for cityLow collection efficiency: 1988 – 1992: 80 percent1993 – 1995: 72 percent1996 – 1999: 80 percent

●Anomaly over P72 million in cash advances●Limited provision for social services●Increased Tommy’s financial clout

Implication of Political Patronage

The mayor’s personal financial power increased while the city’s cash position decreased by P115 million a year for 18 years2.

His cohorts protected tax evaders and encouraged underpayments in exchange for their poll campaign contributions in six elections across 19 years of TRO rule.

Sources: Bureau of Internal Revenue annual reports to the Department of Finance, February 1988 to June 1998; Economic Intelligence and Investigation Bureau, DOF

Second 9-year tenure of TOMAS OSMENA as mayor (Tax map in billions of pesos)

Rama Intervention as Vice Mayor in Revenue Collection

Positive Impact of Rama Intervention in Local Tax Collection Program

Duly paid taxes increased from P650 million3 (2001) when he was sworn in as vice mayor to P755 million on his second term (2004);

Tax take rose to P1.8 billion4

shortly after his re-election to 3rd term (2007) and posted P2.1 billion5 toward May 2010.

Intervention caught Tommy’s ire as his indiscretions6 were gradually exposed.

Sources: Annual reports of the Bureau of Treasury to Secretary of Finance Jose Camacho (2001 to 2004) and Margarito Teves (2005-2010)

First 2-year Revenue Performance of Mayor Rama (Income projection in billions of pesos)

Rama Holds Positive Tax Collection Track Record in Last Two Years as Mayor●Tax collection hit the P2.6 billion7 ceiling in 2011, within one year after being sworn into office as mayor; ●As of July 2012, revenue collections hover the P2.7 billion mark, en route to P3.2 billion8 by the end of fiscal year 2012;●Rama reached unprecedented collection efficiency of over 92 percent in two years – a feat deemed as unthinkable during Tommy’s second mayoralty tenure of nine years (2001 through 2010).

Sources : Annual reports of the Bureau of Treasury to Secretary of Finance Cesar Purisima (2010-2012)

First 2-year Revenue Performance of Mayor Rama (Income projection in billions of pesos)

Council-ordered budget cuts undermine benefits for people In 80 barrios citywide

Osmena-controlled SP ordered P12.96-B budget cut by P7-B

Important projects and beneficiaries affected by budget cuts include:

Sector Name of Project

Location BudgetaryRequest

Result

All Sectors Financial aid to 80 barrios

Two districts P85 million P20 millionslashed

City Hall Employees

Housing Program

North, SouthDistricts

P100 million P100 million slashed

All Sectors General Services

Two districts P1.2 billion P865 million slashed

All Sectors VariousProjects

North, South Districts

P406 million P364 million slashed

Government Taxation Mapping

Two districts P100 million P100 million slashed

Source: City Budget Office; 2012-2013 Expenditure Programs

No funding for New P400-M Flood Control System

Funding for 5,000 college scholarstaken away

Source: Philippine Institute of Applied Politics and Economics (2013)

No funding for 80 school houseconstruction projects

No funding for 200-bed geriatric ward at Cebu Medical Center

Funding lost for P300-M, fully equipped medical laboratory

No More Vitamins, Free Food, health care for 200,000 children

Limited P25,000 financial assistance for each of 16,000 Cebuanos

Deferred purchase of 80 brand-new garbage compactors trucks

ConclusionThousands of people in 80 barrios suffered from Tommy-ordered cuts in the 2012 annual budget. By clipping Rama’s wings, the city council majority showed they are loyal to the interest of one man and not to the welfare of the greatest number.

The clamour for total change will affect the re-election chances of the former mayor and party-mates at the City Council, including his wife’s, Margot.

This white paper may not be reproduced, stored in a retrieval system, or transported in whole or in part or by any means, electronic, mechanical, photocopying, recording or otherwise without prior written permission of the Philippine Institute of Applied Politics.