FINANCE Secretary Cesar Purisima urged local government assessors to update the schedule of market values (SMVs) -- the basis for real property taxation -- to boost the collection of real property taxes.
Purisima said at the Philippine Association of Local Treasurers and Assessors recently that from 2009 to 2010, real property tax at the city, municipal, and provincial levels have registered negative collection growth rates, with an average drop of 9.8% across all levels.
“Many LGUs have not updated their SMVs in years, leading to inaccurate prices. The Asian Development Bank estimates that SMVs lag true market values by 200 percent to 500 percent,” Purisima said.
“According to outdated, long-neglected SMVs, land in Quezon City is priced even cheaper than land in Naga City,” Purisima f said, adding that an improvement in the collection of real property tax has great potential to significantly boost revenues.
The DOF said that real property tax is decided by assessments of land value according to the SMVs, maintained by LGUs.
The agency said that the 2011 data has not been completely submitted. However, Purisima said that it seems to show an upward trend from 2010.
The DOF said that provincial collections in real property tax moved from P4.75 billion in 2009 to P4.52 billion in 2011 with 82% of provinces reporting.
Cities collections went from P21.1 billion in 2009 to P19 billion in 2011 with 78% of cities reporting.
The same trend for municipalities surfaced, with real property tax revenues of P3.86 billion in 2011 with 55 percent of municipalities reporting, compared to P5.35 billion in 2009.
Purisima said that the internal revenue allotment (IRA) dependence has led many LGUs to become lax on their performance.
“As of 2011, 21 of 122 cities, 631 of 1,512 municipalities, and 51 of 80 provinces derive over 80% of their revenue from IRA,” the DOF said.
The Finance chief also instructed the Bureau of Local Government Finance to have a memorandum of agreement on information sharing with the Bureau of Internal Revenue, and use this information to increase collection potential and to widen the tax base, especially for local business taxes and national self-employed collections.
“LGUs must work together with the BIR to improve national tax collection, which will translate into more funds for all, through a larger IRA.
“With LGU registrations of businesses, property, decedents, and other records, we can develop better tax maps to improve compliance,” Purisima said. - Malaya
The Finance chief said that like real property taxes, business tax collection fell from 2009 to 2010 for cities, provinces, and municipalities.
Cities and provinces, however, have posted increases from 2010 to 2011 given currently reported collections.
The DOF said that provincial business tax rose from P653 million in 2009 to P814 million in 2011, while cities collected at least P27.4 million in 2011 compared to P26.3 billion in 2009.
Municipal business tax collections are currently reported at P3.59 billion in 2011, from P4.99 billion in 2009.
Purisima also emphasized the need to make a scorecard for local treasurers in order to properly distinguish between high performers, and to publish this scorecard of collections and indicators in newspapers of national circulation.
“We need to increase the accountability of our local government units in the way that they manage their collections. LGUs can and must play a part in our quest to improve the national tax effort,” Purisima said. - Inquirer