Property valuation bill approved by House
THE tax reform package updating real property valuation standards made it past the House Committee on Ways and Means on Wednesday.
“Right now, valuation standards are lodged with local government units (LGUs)… many of our LGUs have not made any revisions to the standard,” Finance Assistant Secretary Teresa S. Habitan told BusinessWorld on the sidelines of the committee proceedings.
Ms. Habitan said the market value of property moves constantly, but more than 50% of LGUs have not revised their valuations and charge taxes based on outdated land values.
Citing Bureau of Local Government Finance (BLGF) data, Ms. Habitan said only 35 of 81 provinces and 55 of 145 cities have updated their valuation standards.
“Just to put some order into the system, that bill proposes to centralize the function of revising the standard of real property valuation,” she said.
The legislation, if enacted, requires the national government, through the Bureau of Local Government Finance, to develop and maintain a valuation standard consistent with international standards to be used by appraisers and assessors at the LGU level.
During panel discussions for the unnumbered substitute bill, Ms. Habitan said the Department of Finance expects the tax reform package to result in an increase in LGU collections of at least P12.5 billion.
“We have calculated, given for example the same level of assessment rates and also the same tax rates, without change in those two parameters and only the schedule of market valuation (SMV) will adjust because of the reform we will be going to institute, the estimate is that there could be an additional (P12.5 billion to P12.6 billion)… as a result of updating the valuation,” Ms. Habitan said.
A proposed SMV is to be prepared by LGU assessors to be submitted to the BLGF and Bureau of Internal Revenue Regional Office for review and will now be subject to the approval of the Finance Secretary.
An SMV is a table of base unit market values for all kinds of real property, except machinery, which shall be the basis for the determination of real property-related taxes.
The substitute bill consolidates House Bills 2207, 68, 876, 1274 and 1529. — Charmaine A. Tadalan