DAVAO CITY — The city is projecting additional revenue of P722 million with the approval of new assessment levels for real property and amendments to the 2005 Revenue Code of Davao City.

The Davao City Council — Carmencita A. Carillo

The new assessment scheme is expected to bring in P326 million while the code amendments will raise P396 million. The revised assessment levels will be applied to the market value of the real property to determine assessed value.

“We expect an additional income of P326 million with the full implementation of the Schedule for Market Values (SMV) of all lands and base unit construction cost as the basis for real property assessment,” according to Councilor Danilo C. Dayanghirang, chair of the committee on finance, ways and means.

The council approved on third and final reading “an ordinance approving the SMV of all lands and base unit construction cost as basis in the 2018 General Revision of Real Property Assessments in Davao City to take effect beginning calendar year 2019.”

The City Assessor’s Office proposed the following amendments in the SMV based on the 2009 approved assessment level: from 10 to 5% for residential, from 20 to 10.75% for agricultural, from 25 to 12% for commercial, from 25 to 15% for industrial, from 25 to 15% for mineral and from 10 to 5% for timberland.

The committee, however, recommended a much lower SMV at the following rates: 4% for residential, 9.5% for agricultural, 11.75% for commercial, 15% each for industrial and mineral and 5% for timberland.

“We reduced the SMV rates because we want to make sure that we follow the basic principle that it should be affordable and based on capacity to pay of taxpayers,” he said. The SMV was reduced to cushion the impact of the upward adjustment or increase of the market value of lands, buildings, machineries, and other improvements, and in consideration of the rising cost of inflation. 

The new SMV will be implemented in tranches within three years to give businesses more time to adjust to the rates and to become competitive. A third of the total increase shall be due and collectible in 2019, two-thirds of the total increase will be due and collectible in 2020 and the total increase due and collectible by 2021.

Meanwhile, the approval of the amendments to the Revenue Code will lead to a new taxation scheme for individuals and companies doing business in the city.

Mr. Dayanghirang said the amendments are long overdue considering that the city did not amend its Revenue Code in the last 12 years. The Local Government Code authorizes the local government units to adjust tax rates every five years.

Human Resources Management Office Chief Erwin Alparaque, who is also head of the Tax Research and Action Team, said one of the proposed changes in the Code is the imposition of taxes on multinational corporations and other businesses even if they do not have a branch office or sales office in the city.

Most multinational companies still insist that they declare their gross receipts from income derived in the city to their principal offices in Makati or Manila. The amendment to the Code seeks to solve this problem on the situs of tax or place of taxation.

The City Council is also projecting a more than 300% increase in the taxes that will be levied upon quarry operators with the Revenue Code amendment.

The city’s quarry operators pay only P15 per cubic meter of quarry resources which is only around P60 per truckload. Under the amendment to the city’s Revenue Code, quarry operators will have to pay up to P50 per cubic meter or about P200 for every truckload.

Mr. Dayanghirang justified the proposal to increase the tax rates for quarry operators considering that the quarry industry harvests the city’s natural resources and their trucks also contribute to road damage.

Section 138 of the Republic Act 7160 or the Local Government Code, provides that tax on sand, gravel and other quarry resources allows the province to “levy and collect not more than ten percent (10%) of fair market value in the locality per cubic meter of ordinary stones, sand, gravel, earth, and other quarry resources, as defined under the National Internal Revenue Code, as amended, extracted from public lands or from the beds of seas, lakes, rivers, streams, creeks, and other public waters within its territorial jurisdiction.”

The proceeds of the tax on sand, gravel and other quarry resources shall be distributed as follows: 30% for the province, 30% for the component city or municipality where the resource was extracted and 40% for the barangay where the resources were extracted. — Carmencita A. Carillo

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