The Department of Finance’s Bureau of Local Government Finance (BLGF) wants Congress to work on a law that would allow local governments to collect more real property taxes to be used for community development.
In a press conference on June 11, BLGF Head Jose Arnold Tan said local officials are not collecting the appropriate real property tax because they have failed to adjust the schedule to market values, which updates the property taxes to be collected in their localities.
The local government code requires the schedule of market values to be updated every three years, Tan said, noting that some provinces are lagging by as much as 20 years.
The issue, he said, is that whenever the BLGF encourages the local governments through advocacy, training courses, and workshops to make the adjustment, they complain that raising taxes would affect their political careers.
Some local executives and even Sangguniang Bayan members have however expressed their willingness to forego their authority to approve the schedule of market values, he said.
“They are one with the Department of Finance in amending the local government code that the approval of schedule of market value will now be with the secretary of finance,” Tan said.
Once this is approved, local governments will be left with the enactment of an ordinance imposing the tax rate, he explained.
“We depoliticize the schedule of market value; to have a one value for the schedule of market value and the zonal value. We call it the Valuation Reform Act — strengthening the BLGF to get this additional function of reviewing the schedule of market value being prepared by the local assessor,” he said.
Once it is prepared, it will be reviewed by the BLGF and approved by the secretary of finance. This initiative will be done in coordination with the Bureau of Internal Revenue.
Tan said the proposal has passed the House of Representatives and is now with the Senate.
“I don’t know if it will be passed this June but probably in the resumption in July. We need 14 votes but we only got 12. Most probably, we have to lobby again,” he said.
Provinces are losing as much as P9.4 billion as a result of their failure to update the schedule of market value, according to Tan.
He pointed out that in terms of infrastructure development, P9.4 billion would be enough to build 700 public markets, 979 kilometers of roads, 2,748 day-care centers, and 9,580 classrooms.
For the country’s cities, the foregone revenue with regards to real property taxes is higher, at about P20.3 billion, Tan said.