Reform of the country’s real estate appraisal system, as proposed in the third congressional tax package, would nearly double government revenues in five years, the Asian Development Bank (AfDB) said on Wednesday.
In a webinar for local treasurers, AfDB public finance economist Aekapol Chongvilaivan cited a 2019 study showing that the proposed appraisal reform law would increase the combined collections of municipal property taxes and by 25% in 2023, and would further increase additional tax revenues by the same amount. 90% by 2025.
He said estimates showed that with the implementation of valuation reforms, additional provincial property taxes would increase to 17.56 billion pesos in 2023, 23.23 billion pesos in 2024 and 30.63 billion pesos. pesos in 2025.
Additional collections of property taxes in cities would also reach 65.76 billion pesos in 2023, 87.01 billion pesos in 2024 and 114.73 billion pesos in 2025.
In contrast, the data showed that the proportion captured by local governments in property taxes even declined by more than 8% per year, even as strong economic growth boosted domestic property market prices by 15% per year. on average from 2009 to 2018, Chongvilaivan said.
He said LGUs could increase their collections even without increasing rates as long as the valuation of real estate was regularly updated and harmonized. Deputy Finance Secretary Antonette C. Tionko told the webinar that the Department of Finance (DOF) hoped the third tax reform package, which was already passed by the House of Representatives last year, could also soon hamper the Senate.
Chongvilaivan said the package would solve the relatively low property tax efficiency of many LGUs, which had forced them to raise tax rates to the maximum legal limits.
The reform bill would address the weak enforcement of property taxes such as the unused property tax; the lack of uniform property assessment; obsolete real estate values, which usually lead to political intervention in the valuation of the property; and the limited use of information technology in the assessment process.
Amid the pandemic-induced recession, Chongvilaivan said local property taxes would be hit in the short term, but collections would also rebound when the economy recovered.
Preliminary estimates from DOF’s Local Government Finance Bureau (BLGF) showed property tax collection this year could slow to 56.14 billion pesos, nearly half of the pre-pandemic target of 107.2 billion. of pesos.
For 2021, the BLGF has estimated that property taxes could even drop to 28.24 billion pesos.
Of all the LMU’s sources of revenue, BLGF reduced the 2020 target to 193.04 billion pesos from 307.1 billion pesos previously, while the 2021 catch was only expected to reach 102.01 billion pesos.
The AfDB has already helped the Philippines by providing a loan of $ 300 million under the local governance reform program in 2018-2019. Another policy-based loan of $ 400 million is in the works to fund reform initiatives this year and next.
Last June, the AfDB also gave the go-ahead for a $ 26.5 million project loan to the Philippines for LGUs to digitally assess property taxes.
Subscribe to INQUIRER PLUS to access The Philippine Daily Inquirer and over 70 titles, share up to 5 gadgets, listen to the news, download from 4 a.m. and share articles on social media. Call 896 6000.
For comments, complaints or inquiries, contact us.