LGUs urged to harness property-related taxes
The state-run National Tax Research Center (NTRC) is pushing for reforms in land valuation to increase the collection of property taxes and provide local government units (LGUs) with the needed buffers.
“The implementation of property-related taxes in the Philippines still needs to be enhanced. While tax collection generally showed growth during the calendar years 2012 to 2016, the LGUs still have not harnessed the full potential of increasing their revenues, specifically property taxes since these are their main sources of revenue,” tax think tank NTRC said in a report titled “Analysis of the Revenue Performance of Local Taxes on Real Properties CY 2012-2016.”
Based on data compiled by the NTRC from the Philippine Statistics Authority, revenues from property taxes rose at an average of 10.6 percent a year during the five-year period covered by the study, even as property tax rates also increased by an average of 7.3 percent per annum.
From an aggregate revenue from real property taxes worth P42 billion in 2012, the figure climbed to P55.6 billion in 2016, the NTRC said.
Since property tax collections rose faster than average gross domestic product growth of 6.6 percent during the period, the NTRC said revenues were “able to keep up with the changes in national income.”
However, the NTRC pointed out business tax collections and nontax revenues grew by a faster 10.2 percent and 8.7 percent, respectively, on average during the same five-year period.
Also, “in spite of the substantial increments in locally generated revenues, the data collected for calendar years 2012-2016 show that LGUs continued to rely heavily on externally generated revenues comprising mainly of the internal revenue allotment (IRA), share from the utilization of national wealth, grants and aids, borrowings and others, as they contributed to an average of 66.9 percent to total revenue of LGUs,” the NTRC said.
IRA alone cornered the biggest chunk at 59.3 percent of LGUs’ total external sources of funds, showing there was “heavy dependency” on funding sources other than those they could generate on their own, the NTRC added.
As such, the NTRC said “making property-related taxes as the productive sources of local government revenues should be the main priority of LGUs.”
Specifically, the NTRC recommended to “minimize political influence in the valuation processes by removing from the LGUs the power to appoint local assessors and approve the schedule of market values.”
The NTRC also urged the immediate passage of package three of the Duterte administration’s comprehensive tax reform program “to address the problems of property valuations to establish a single valuation base that will increase revenues and improve local autonomy.”
Passed by the House of Representatives in November, the third tax reform package contained in House Bill No. 4664, or the real property valuation bill, “proposes the adoption of internationally accepted real property valuation standards, the use of single valuation for land transactions taxation, the use of [a new and uniform] schedule of market values for right of way acquisition, and the strengthening of the valuation arm of the Department of Finance (DOF)-attached Bureau of Local Government Finance,” the DOF said this month. —BEN O. DE VERA INQ
