A STATE think tank is pressing for improvement in implementation of property-related taxes as part of efforts to boost local government units’ (LGU) revenue-raising capacity.

National Tax Research Center (NTRC) said property tax collections grew by 7.28% annually in the 2012-2016 period, to P55.57 billion in 2016 from P42 billion in 2012, keeping up with the country’s 6.75% average gross domestic product growth in the same period.

But “[w]hile the tax collection generally experienced growth during calendar years 2012-2016, the LGUs still have not harnessed the full potential of increasing their revenues, specifically property taxes since these are their main sources of revenue,” NTRC said in a March-April journal titled, “Analysis of the Revenue Performance of Local Taxes on Real Properties.”

Despite the improvement of locally generated revenues, data showed that LGUs “continued to rely heavily on externally generated revenues comprising mainly of the internal revenue allotment, share from the utilization of national wealth, grants and aids and others.”

Hence, the think tank urged the government to implement reforms and adopt new technigues to help LGUs improve revenue collections by minimizing the political influence in the valuation processes, establishing a complete real property database and digitizing assessment records and collection records of taxpayers, among others.

It said passage of the Package 3 of the Comprehensive Tax Reform Program should help address some of these issues as it will establish a single valuation base and establish a database that “will increase revenues and improve local autonomy.”

Real property tax collections contributed the bulk of LGUs’ total property tax revenues at 91.06%, while transfer tax take accounted for 7.93%, and special assessments and idle land tax made up 0.48% and 0.54%, respectively.

Republic Act No. 7160, or the Local Government Code of 1991, requires real property tax rate adjustments — usually involving increases — every three years, but this requirement has been largely ignored since local officials are elected every three years as well. — Beatrice M. Laforga