Reforms could increase land tax levies on LGUs by 113 billion pesos


LOCAL GOVERNMENT UNITS (LGUs) could increase their property tax collection (RPT) by 113.4 billion pesos with the implementation of a project that will digitize their tax assessment and collection processes, said the finance department.

Data from the Bureau of Local Government Finance (BLGF) showed that the Local Governance Reform Project (LGRP) is expected to increase property tax collection by 61.7% from the 70.14 billion pesos it he collected in 2019.

BLGF Executive Director Niño Raymond B. Alvina said in a statement Tuesday that the program aims to help at least 1,372 LGUs meet 100% of their collection and assessment targets by 2024, and to train over 858 or 50% of the 1,715 local assessors to use new digital tools.

Mr. Alvina said that the share of RPT in total tax revenue by LGUs has been declining since the promulgation of the Local Government Code in 1992, as it only represents 9% of overall tax revenue, compared to 13% of corporate tax revenues. .

BLGF data showed that LGUs collected 70.14 billion pula in RPT in 2019, or 84% of the target of 83.77 billion pula.

Municipal governments reported the highest collection in 2019 with 48.7 billion pesos, followed by municipalities with 10.87 billion pesos and provinces with 10.58 billion pesos.

In the second quarter of 2020, RPT collections fell 6% to 46.24 billion pesos year-on-year and also missed the target of 56.14 billion pesos by 17.6%.

The Asian Development Bank (ADB) set aside $ 26.5 million (1.32 billion pesos) for the program in July 2020 and a first loan of $ 300 million (15 billion pesos) in November 2019 The government has also allocated $ 4.96 million (242 million pesos) from its budget for the project.

The AfDB plans to lend an additional $ 400 million (19.5 billion pesos) for the program this year.

The LGRP aims to improve the real estate valuation systems of LGUs by deploying digital tools to make reporting more transparent and update tax maps.

The Interagency Governing Board (IGB), chaired by DoF Secretary Carlos G. Dominguez III, was formed to implement the four-year program.

“This project is quite important. We need to pay attention to this because ultimately it will help local governments improve their ability to finance themselves, ”Dominguez said at the first council meeting on May 18. The IGB will meet every two months.

Once a more integrated and reliable valuation database for properties is established, BLGF’s Mr Alvina said this could provide better benchmarks as it captures the true market value of the land.

The Philippines’ share of collecting property taxes in the country’s economic output is lower than that of its Asian peers, he added.

Mr Alvina said the country’s collections were only 0.5% of GDP in 2019, roughly similar to Thailand, but lower than the ratio of 2% from Singapore, 2.5% from Japan and 3% from South Korea.

It is also far from the standard of 2% of the property tax-to-GDP ratio set by the Organization for Economic Co-operation and Development (OECD).

A bill reforming the country’s property assessment system is part of the Duterte administration’s overall tax reform program. – Beatrice M. Laforga


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