An Asian Development Bank (ADB)-funded project that aims to adopt digital tools in strengthening local property valuation and tax collection nationwide is seen to help shore up real property tax (RPT) collections of local government units (LGUs) to the goal of P113.4 billion by 2024, the Department of Finance (DOF) said yesterday.
In a statement, the DOF said the Philippines is targeting to increase revenue of LGUs from RPT to the said amount through the implementation starting this year of the ADB-backed Local Governance Reform Project (LGRP).
According to data posted on the Bureau of Local Government Finance’s (BLGF) website, in 2019, RPT collections amounted to P70.14 billion versus the target of P83.77 billion, translating to a collection efficiency of 84 percent.
Niño Raymond Alvina, BLGF executive director, said in the DOF statement LGRP’s goal is to have at least 80 percent or 1,372 LGUs achieve 100 percent efficiency in RPT collection and valuation by 2024.
Alvina said during the virtual first meeting last May 18 of the Interagency Governing Board (IGB) tasked to implement this four-year project that the share of RPTs to local tax revenues has been decreasing since the enactment of the Local Government Code, and currently contribute only nine percent as compared to business tax collections that account for 13 percent of total LGU aggregate income.
As of 2019, around 98 out of the 146 cities and 46 out of the 81 provinces in the country are non-compliant with the requirement to revalue properties in their respective jurisdictions once every three years, Alvina added.
He informed the IGB that 64 percent of LGUs have outdated property valuations, with the RPT collection efficiency of provinces and municipalities at only 68 percent and provinces, only 71 percent.
As a result, the Philippines lags behind its Asian peers in terms of the share of property tax collections to the gross domestic product (GDP), Alvina said.
The Philippines’ property tax-to-GDP ratio has been decreasing since 2003, settling at only 0.5 percent as of 2019, which is the same as Thailand’s, and way lower than the two-percent average set by the Organization for Economic Cooperation and Development, the DOF said.
Alvina said the LGRP aims to correct the following infirmities in the property valuation system of LGUs: absence of an integrated and reliable property information and valuation database for transactions to capture the true market value of real properties; poor record keeping and outdated reporting systems; weak capacity of local valuation staff; and political considerations in approving and implementing updated schedule of market values (SMV).
He said under the LGRP, a property valuation office will be established by this year in the BLGF.
Existing RPT guidelines will also be updated to align them with international valuation standards, and valuation training centers and training hubs will be set up to improve the competency and professional skills of local assessors, Alvina added.
The goal is to capacitate at least 858 or 50 percent of the country’s 1,715 local assessors on the use of electronic learning management systems and develop formal valuation education programs with partner academic institutions to further professionalize their ranks, he said.
Alvina said the LGRP will develop and roll out a real property valuation information system, and implement and operationalize computer-assisted valuation, billing and collection tools for RPTs in 20 participating LGUs.
Updating the property assessment records of participating LGUs, assisting LGUs in updating their SMVs and capacitating them on tax compliance are also among the expected outputs of the project, he added.
The agreement for the $26.53 million loan to implement the LGRP was signed between the Philippines and ADB in July last year.
The government’s counterpart funding for the project is $4.96 million.
Carlos Dominguez, DOF secretary, for his part underscored the importance of the LGRP in boosting the revenue-raising capacities of LGUs during the meeting of the IGB.
“This project is quite important. We should put our attention to it because in the end it will help the local governments improve their capacity to raise their own finances,” Dominguez said. – Angela Celis
