REFORM the country The property valuation system could generate more revenue for local government units (LGUs) and speed up the rollout of infrastructure projects, experts say.
In a webinar hosted by the Foundation for Economic Freedom, Inc. on Wednesday, Bureau of Local Government Finance (BLGF) Director Ma. Pamela P. Quizon said the existing system is plagued with issues such as overlapping assessments, outdated rates, lack of a single oversight body, and lack of an electronic property database.
This has resulted in inefficient collection of property taxes by LGUs, loss of revenue due to overvaluation and undervaluation of assets, and lengthy legal disputes, among others.
She said only 45% of LGUs had updated their Market Value Calendar (MVS) as of March 2019, leaving the rest of the 98 cities and 46 provinces with outdated MVS.
“[Property values for public purposes are outdated because] there is no penalty for non-compliance in regularly updating the LGU scale of fair market values and BIR (Bureau of Internal Revenue) zonal values. LGUs fail to update and revise SMVs despite legal requirements because they are unpopular. There is a fear of political reaction. They lack technical skills and [their budgets cannot cover] reassessment costs,” Ms. Quizon said.
The Duterte administration wants Congress to pass the Real Estate Assessment and Valuation Reform Bill, the third part of its comprehensive tax reform agenda.
The House of Representatives approved its version of the bill at third reading in November 2019, while the Senate version is still pending at the committee level. The bill is among the list of measures the Council of Executive and Legislative Departments agreed to pass before Congress adjourns in June.
Asked for comment, the leaders of the Senate and the House of Representatives did not respond within the time limit.
Discrepancies over different agencies’ assessments have also led to disputes.fldelays in infrastructure projects, with BLGF estimates showing that 23 state agencies have their own assessments.
Undersecretary of Transportation for the Railroads, Timothy John R. Batan, said the rollout of several infrastructure projects has been slowed by issues acquiring right-of-way.
Batan said resolving right-of-way issues is a long and tedious process, especially in the absence of a uniform property valuation system. The property valuation reform will speed up the right-of-way and site acquisitions for infrastructure projects, he said.
“If we have better visibility and predictability on the valuation of real estate, which this reform program seeks to achieve, then we will be able to unlock this public wealth. The measure of the country’s public wealth is largely in its land assets and if we can unlock that then 4 to 5 times as many of the projects we need to build can find their funding from (revenue generated by) the land value creation,” he said. said during the forum.
For example, Mr. Batan said that the government had committed about 7 billion pesos IfFinancial losses due to delays in the implementation of Cavite Metro Line 7 (MRT) and Light Rail (SLR) Line 1 extension projects. These losses are mainly due to valuation issues, additional payments to close the expropriation proceedings and contingent liabilities incurred due to the delayed acquisition of the right-of-way.
Overall estimated economic losses attributed to valuation issues in the two railway projects have totaled 31.34 billion pesos so far, as slow deployment has also delayed the realization of economic benefits.Ifts.
He said the existing properties where the government railways are located covered 844,000 square meters (m²) as of today. The rail footprint is expected to increase to 18.545 million m². given the state’s current infrastructure pipeline.
By 2022, he said the government must acquire the 9.5 million sq m right-of-way. and 13.5 million m². construction sites to lay 1,209 kilometers (km) of railway tracks and install 168 stations where 1,381 trains will be deployed.
The Real Estate Valuation Reform Bill seeks to establish a single valuation basis for taxation through LGU VMS. Updated values may also be used as a reference for other purposes, such as acquiring, leasing, and leasing the right-of-way, among others.
“The real estate and property development industry supports the passing of the Valuation Reform Act. However, for it to effectively achieve its objectives, particularly in generating investor confidence in the valuation system, checks and balances must be in place to make it truly fair, equitable and transparent, especially for taxpayers” , said Rosie Tsai, president of the Subdivision and Housing Developers Association. said during the forum. — Beatrice M. Laforga