By Vann Marlo M. Villegas
CITING the country’s currently high inflation rate, Quezon City councilors have filed a measure that will suspend until after 2019, an election year, implementation of a hefty increase in real property tax that has been cleared by the Supreme Court to proceed.
In a statement, the local lawmakers that filed the measure — proposed Ordinance No. 20CC-497 — said that implementation of Quezon City Ordinance No. SP-2556, Series of 2016, should be suspended “given the current economic difficulties being experienced by our people”, referring to the current multiyear-high inflation rate that has averaged five percent in the nine months to September against the central bank’s 2-4% full-year target range for 2018.
Critics have laid inflation’s blame squarely on the first of up to five planned tax reform packages — Republic Act No. 10963 or the Tax Reform for Acceleration and Inclusion Act that cut personal income tax rates but increased or added levies on a host of items when it took effect in January — although rising world oil prices had also clearly played a part in inflation’s spike this year.
Highlights of minutes of the last Monetary Board meeting in September bared authorities’ expectations of elevated inflation until yearend, though the trend should return to target in 2019 with the planned shift to a regular tariff scheme from the current quota system for rice imports that is expected to slash retail prices by P7 per kilogram and shave 0.7 of a percentage point off the inflation rate next year.
The Quezon City lawmakers noted that Malacañang itself is moving to suspend the scheduled implementation of the second tranche of oil excise tax hike scheduled in January in the face of soaring inflation.
The Supreme Court in September lifted the April 2017 temporary restraining order on Quezon City’s realty tax hike, ruling that the Alliance of Quezon City Homeowners’ Association, Inc. that sought to stop the increase did not have legal capacity to file a case.
The local law raised fair market values (FMV) of residential, commercial and industrial real properties by 400-733.33%, which in effect raises tax payable by real property owners by 39-131%. New assessment levels were slashed to five percent for residential and 14% for commercial and industrial lands in order to cushion the increases in realty property values.
“In accordance with these realities, we believe it is our sworn duty as duly elected representatives of our people to suspend the implementation of the FMV ordinance for the time being so as not to further burden the people of Quezon City during these trying times in which the prices of basic commodities and petroleum products have increased considerably,” the statement read.
“… [I]n order to temper the effect of significant increase of commodities, especially to residents of Quezon City, it is not only proper but… imperative to suspend the collection based on the updated schedule of fair market values of lands and basic unit construction cost for buildings,” according to the proposed ordinance.
The proposed ordinance added that the 1996 schedule of fair market values will be the basis for real property tax collection until 2019.
The city’s fair market values were last adjusted in December 1995 even if Republic Act No. 7160, or the Local Government Code of 1991, requires a review every three years. Most local governments have failed to observe this provision of the law religiously since their officials are also elected every three years.
The proposed ordinance will be referred to the Quezon City council’s Ways and Means, Appropriations and other committees on Nov. 12, with final-reading approval targeted before yearend, city council members said in a press conference on Friday.
‘IT’S NOTHING POLITICAL’
“When we were discussing it — kaya two years lang ang grace period na sinuggest namin (we suggested a two-year grace period) — because we’re still confident with our current administration that our economy will start booming and the inflation rate will go down [by 2010],” Majority Floor Leader Councilor Franz S. Pumaren said when asked if the May 2019 elections had anything to do with the move to suspend implementation of the tax increase.
“(W)hen that [Sept. 18 Supreme Court] ruling came out, a lot of people texted me. Sabi nga, what is happening right now, medyo mahirap na nga (it’s quite tough) because of inflation and everything, baka we can do something about it daw,” Mr. Pumaren said in a press conference.
“Well, I discussed it with our fellow councilors. Well, I guess this is the best contribution that we can do right now for the people of Quezon City,” he added.
“It’s nothing political. It just happened… probably if the ruling came out early January — earlier — it will be the same if the current inflation rate were about six percent then.”
September, which saw a fresh nine-year-high 6.7% inflation rate, marked the ninth consecutive month that overall price hikes accelerated and the seventh straight month that inflation breached the central bank’s 2-4% target band for 2018.
The planned increase in real property tax is estimated to add P700 million in collections in the first year of implementation. Latest available data from the Finance department’s Bureau of Local Government Finance showed that Quezon City was the biggest contributor to Metro Manila’s revenues last year, accounting for P15.161 billion (four percent more than P14.535 billion in 2016) or nearly a fifth of the National Capital Region’s P77.099-billion total collections. Real property tax was Quezon City’s second-biggest tax revenue source last year at P3.431 billion, next to P9.204 billion in business tax.
Mr. Pumaren believes that Quezon City Mayor Herbert M. Bautista will back their proposed ordinance, saying in a mobile phone message: “With the existing economic conditions and the adverse effects of inflation to our people, we believe that our… mayor will support and approve the same.”
The proposed ordinance was signed by Mr. Pumaren as well as councilors Allan Benedict S. Reyes, Alexis R. Herrera, Ranulfo Z. Ludovica, Raquel S. Malangen, Ivy Xenia L. Lagman, and Godofredo T. Liban II.