Last-ditch pitch for real property valuation bill

Finance Sec. Carlos G. Dominguez III

WITH just over two months left under the Duterte administration, Finance Secretary Carlos G. Dominguez III renewed his call for the passage of the Real Property Valuation and Assessment Reform Act, saying this would help the government collect more revenues.

Dominguez lamented that the government is losing tens of billions of pesos because it is using an “outdated” real property valuation system which the proposed measure seeks to address.

Passing the bill would help the government collect the right amount of taxes by regularly updating the schedule of market values (SMV) in assessing real estate assets, the finance chief said.

“The market value of prime commercial areas in Ayala Avenue within the vicinity of San Lorenzo in Makati City is only about  P40,000 per square meter (sq m), based on the City’s SMV, when in fact, the real market value ranges from P400,000 to P900,000 per sq m.  So we are losing tens of billions of pesos because that kind of wealth is not being taxed correctly,” Dominguez said in a statement.

A check by the Department of  Finance (DOF) on land values located in Barangays San Lorenzo and Bel-Air in Makati City showed that the current  SMV  for real property tax (RPT)  imposed by LGUs in these areas is only P40,000 per sq m, as opposed to the high-end zonal value of P940,000 per sq  m used by the Bureau of Internal Revenue to compute estate, donor’s and capital gains taxes, which are national taxes.

Based on the current SMV set by the Makati local government, the DOF said the total RPT for both commercial areas would only amount to 50.27 million, which it called “relatively paltry” compared to P1.18 billion that could be collected yearly using the more current zonal values to compute the RPT.

“Thus, the total RPT that could be collected yearly would be higher at P593.78 million for Barangay San Lorenzo, and P587.46 million for Barangay Bel-Air, or a total of P1.18 billion for these sampled commercial areas in Ayala Avenue,” the DOF said.

Better than wealth tax

Dominguez also reiterated that reforming the property valuation system is the correct way to impose a so-called “wealth tax” on the rich, because land cannot be hidden nor spirited away unlike the proposed wealth tax on movable assets that could lead to capital flight and tax avoidance.

He added that local government units are in the best position to implement the “effective form of wealth tax” by using updated SMVs and a property valuation system aligned with international standards. However, the DOF pointed out that LGUs are hesitant to impose the RPT based on updated SMVs, mainly due to political considerations despite the Local Government Code stating that these should be updated every three years.

“That kind of wealth cannot escape to offshore accounts or anywhere. That is wealth here. The other kind of wealth they want to tax can disappear,” Dominguez said in a statement on Monday, referring to the proposals of some individuals and legislators to impose a “wealth” tax on the country’s richest Filipinos.

The third package of the Duterte administration’s comprehensive tax reform program also seeks to increase government revenues by broadening the tax base used for property-related taxes imposed by the national and local governments instead of raising the existing tax rates or devising new taxes.

Last year, Dominguez wrote a letter to House Speaker Lord Allan Jay Velasco to say that imposing a “super-rich” tax on individuals with assets exceeding P1 billion as proposed in House Bill (HB) No. 10253 would defeat its purpose of generating more revenues.

While this wealth tax could initially lead to gains in tax collections, it could, at the same time, discourage growth and investments in the long haul, he said in his letter.

Total
4
Shares

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Previous Article

Moody’s has stable outlook on PHL, 14 banking systems

Next Article

SRA to sugar import critics: Can you handle shortage?

Related Posts

Read more

Kids Bike Camp

The Sun Life Cycle PH is all geared up for its grand return with a pre-event bike camp for kids on April 16 at the Quirino Grandstand and the main event on April 23 at the Vermosa Sports Hub in Cavite.

Total
4
Share