THE REFORM of the real property valuation system will create new revenue sources for local government units and make them more autonomous by reducing their dependence on funding from the National Government, according to the Bureau of Local Government and Finance (BLGF).
BLGF Executive Director Niño Raymond B. Alvina made the statement before the Senate committees on Ways and Means, Local Government, and Finance which are considering three senate bills seeking to establish a standard valuation base for taxation.
Mr. Alvina noted that 60% of LGUs use outdated property valuations, adding that around 97 cities and 40 provinces are non-compliant with the requirement to revalue properties every three years.
When provinces use outdated Schedules of Market Values (SMVs), they forego up to P7.4 billion in real property taxes, Mr. Alvina said.
Cities miss out on about P23.077 in real property taxes when they use non-updated SMVs, he added.
“If fully enforced and properly administered, real property tax is a progressive and stable source of revenues to be shared with municipalities, barangays, and local school boards,” Mr. Alvina said.
He said real property taxes could generate as much as P30.5 billion in incremental revenue once the measure is approved.
“This reform would also ensure higher education fund collections. This will support the expanding needs and operations and demands of public schools in local government units (LGUs). We estimate that the increase in allocation for public school students, if this package three is realized, could potentially increase by 36%, which means more funds available for the public education sector,” he said.
Meanwhile, he allayed fears that the proposed measure will weaken the fiscal power of local governments.
Mr. Alvina said local authorities “would still be responsible for setting the values, the assessment, the imposition of tax rates and the preparation of annual budgets based on the projected revenues resulting from their decision in the assessment level and tax rate.”
“We want to emphasize that the measure will support local autonomy as we are helping the LGUs improve in key components in their property tax administration process,” he said. “Three of the four components in the overall property tax administration will remain part of the political function of the LGUs.”
“LGUs will continue to regulate and determine for themselves the tax rate and assessment levels, while the values are prepared by the accessors, subject to compliance review and then approved by the secretary of finance.”
The proposed measure is one of the last two packages of the administration’s comprehensive tax reform program. — Kyle Aristophere T. Atienza