DOF: Real Estate Valuation Reform to Increase LGU Revenues

MANILA, Philippines — The Department of Finance (DOF) is urging Congress to pass property assessment reform to provide local governments with additional revenue they can generate on their own.

DOF chief economist Gil Beltran said in an economic bulletin that government spending rose 10% to 301.46 billion pesos in January from 274.8 billion pesos a year ago, due to an increased allocation to localities.

As mandated by the Mandanas ruling, Beltran said the government should increase local governments’ share of tax revenue from revenue agencies like the Customs Office.

“The country had to borrow more to fund the pandemic response. The national government must also share BOC collections with LGUs with the implementation of the Supreme Court decision in the Mandanas-Garcia case,” Beltran said.

According to Beltran, lawmakers should approve real estate assessment reform so that local governments generate new revenue that they can deploy for social services.

Beltran explained that the measure also mobilizes new funds without the need to rely on the national government.

With greater resources as a result of the Mandanas-Garcia affair, the chief economist said LGUs should take on greater fiscal responsibilities and perform the functions assigned to them by the 1991 LGU code.

“This is effectively fiscal federalism and could be further improved by adopting the [Property] Valuation Reform Act so that LGUs are empowered to leverage even more internally generated resources,” Beltran said.

Property valuation reform, the third package of the comprehensive tax reform program, adopts valuation standards observed by the international community.

It establishes a single property tax base through the use of reference values ​​to improve collection. The reform tasked the Local Government Finance Office with developing the unified standards guiding appraisers and appraisers in the valuation of properties.

However, local governments retain the power to set, change and regulate tax rates.

This, Beltran explained, should boost investor confidence in land and property markets that can be maximized by localities by bolstering their war chests.

As the Supreme Court stated in the Mandanas case, the national government must increase the share of internal revenue of local government units this year.

Data from the Department of Budget and Management (DBM) showed that local governments will receive a total of 959.04 billion pesos in 2022, of which 326.07 billion pesos will go to municipalities, 220.57 billion pesos to cities and provinces and 191.8 billion pesos. billion barangays.