Tax management
Improved revenues due to sound fiscal measures have given Quezon City leverage to take on social services and developmental challenges
By Delma L. Peyra

Quezon City, home to one out of five of Metro Manila’s teeming ten million people, is the country’s richest city according to the Commission on Audit. In 2002, tax collections, on account of the local government’s successful revenue-generating strategy reached P5.43 billion, up 49% from the previous year’s P3.64 billion. The distinction should not have been far-fetched as Quezon City has long been the country’s political capital for more than five decades, and must therefore be a showcase of a thriving Philippine city. And with the explosive population growth of the metropolis, the national capital region’s cities must have the resources to play its key roles in providing for social services and ensuring an environment where commerce can thrive.

Like the national government, the priority for a city as big as Quezon City – the Metro’s biggest both in terms of population and land area, and the country’s second largest next to Davao City – is to put its finances in order. Under the administration of incumbent Mayor Feliciano Belmonte, former Speaker of the House of Representatives, revenues soared, in large measure to improved tax collections. This would not have happened had the local government not thought of creative ways of making taxpayers feel they are valued.

Taxpayers: Priority One
Paying taxes to city hall conjure images of slow, sweaty, vertigo-enducing efforts at lining up to pay one’s dues. But in Quezon City, taxpayers are, well, pampered. At an air-conditioned taxpayers’ lounge, free coffee and iced tea are served.

But this is just icing on a very well prepared-cake. For one, Quezon City is the first local government in the Philippines with a computerized real estate assessment and payment system. City Hall developed a database system that now contains around 400,000 property units with capability to record payments. An indicator that computerization works is that even with about 20,000 taxpayers that came in hordes to City Hall to beat a deadline during a peak day of the tax season in 2003, the system processed 13,200 collection payments and 7,813 assessment applications – all in a single day. On 31 March 2003, Quezon City earned almost P200 million, a record one-day tax collection revenue.

Without increasing rates, the city’s real estate tax collections – its number two source of revenues – soared 53% to P848 million in 2002 from P553.4 million in 2001. The local government’s approach was to encourage taxpayers to pay their dues in advance by offering discounts. Conversely, those who have not been paying their taxes diligently over the years faced the consequence of their properties being sold in auction.

For those sectors that include manufacturers, retailers, high-tech companies faced with increased tax rates (business taxes in Quezon City before Belmonte’s administration were the lowest in Metro Manila), City Hall has sweetened the bitter pill by offering discounts or deferment of tax payment in exchange of voluntary declaration, for example in the case of those with companies with undeclared machinery.

Priority on revenue-generation underscores the effort of cities like Quezon City to be independent from the national government in raising money and financing its operations. Internal revenue allotment (IRA) in Metro’s biggest city now ranks just third among its sources of income, next to business taxes and real estate taxes. A key indicator used by the City Competitiveness Program of the Asian Institute of Management (AIM) to measure the responsiveness of local government to businesses is the percentage of IRA to city revenue. Most first-class cities – among them General Santos, Zamboanga, Baguio, Iloilo, and Cagayan de Oro – rely less on their IRA allotments from the national government as source of income.

The Other Challenge
With its finances in order, Quezon City can now face the tremendous tasks that face a city that’s after all a magnet for migrants from the provinces, mostly the poor who usually end up adding to the growing number of slum dwellers in the metropolis. Together with the city of Manila, Quezon City holds the biggest number and concentration of slum population in the country. Naturally, this has put pressure on the local government’s capacity to provide for basic services such as water services, healthcare, garbage collection, housing, and education.

When past President Manuel L. Quezon founded the city in 1939, he envisioned a working man’s community – and by commonly held impression, it is. Among the cities in the Metro, it doesn’t have the gilded Hispanic history of an old city like Manila to fall back on. Nor does it have the relentless, competitive aspirations of Makati. Instead, Quezon City is known as a middle-class enclave – where living more than commerce takes precedence, and where the democratic spirit of equality among citizens, at least intellectually, is treasured. But beyond the leafy confines of the State University in Diliman and the Ateneo along Loyola Heights, is a city that needs to make sure that explosive, unchecked urbanization does not spoil its dream as a “quality community”.

In the AIM 2002 list of competitive cities, Quezon City got the lowest score among 33 Philippine cities in terms of quality of life – quite a disappointment not only for the city but for the country as well – that the nation’s very capital should be the least habitable. Traffic, pollution, drugs, and the increasing number of the urban poor have become all too common realities in Quezon City.

Fortunately, after putting fiscal restraint in place, Quezon City’s government has made social services a priority. One of the key programs is the provision of not only free, but quality education from pre-school to high school. Some 14,000 children enroll annually in the city’s 201 daycare centers. Classroom construction has also been a major activity in the city, with the goal of providing enough facilities for the continuously growing student population.

Health insurance has also given people greater access to public health services. The city government, for example, has set up a P5.4 million trust fund in nine hospitals for the treatment of indigents. To boost employment, collateral-free loans and job training are provided. Specifically to decongest traffic-prone areas and build intra-community roads, the local government has allocated P811.4 million for infrastructure in its 2002 budget.

With a vast land area at its disposal, Quezon City can very well accommodate a large number of businesses. The 15-hectare Eastwood City CyberPark is a special economic zone (with incentives for investors) especially for information technology locators and products for export. It is a mix-development with residential (a hot market for condominiums), recreational (one with of the mostly lively nightlife in the metropolis) and commercial facilities. It has attracted a number of multinational companies – among them Citibank, IBM, E-Telecare, Publicis-Ama and many more. Even the Cubao Business District has lately been given a spruced up look to restore shine to a once booming entertainment and retail center.

Mix in competent local government and a city with vast resources – human and natural – and Quezon City could very well live towards the vision of its founder as working man’s community – a livable one at that, and ever-ready to face the challenges of urbanization.

For more information, visit Quezon City’s official website at
http://www.quezoncity.gov.ph