NTRC rejects property tax exemption for seniors

MANILA, Philippines - The National Tax Research Center (NTRC) of the Department of Finance (DOF) has thumbed down a proposal at the House of Representatives seeking to exempt from property tax the families of senior citizens.

House Bill 4530, filed by Caloocan Rep. Oscar Malapitan seeks to exempt senior citizens from the payment of real property tax and any tax on real property such as the Special Education Fund of their family homes and the land on which it is situated.

The author filed the bill, saying that senior citizens have no sufficient income to support their families of their daily needs at a time when prices of basic commodities have skyrocketed.

However, in a position paper, NTRC executive director Lina Isorena said such a proposal may not be advisable given that this have an adverse effect on local revenues.

“It should be noted that real property tax is one of the major sources of revenue of local government units. It contributes about 48.67 percent to total tax revenue of LGUs. If the revenue from this tax is eroded, the financial position of LGUs will be adversely affected,” Isorena said.

Isorena said that LGUs would have to forego an estimated P222.62 million in revenues yearly from real property tax assuming that two percent of the assessed or taxable values of land and improvements in all LGUs are owned by senior citizens.

Furthermore, Isorena said the proposal may encroach on the fiscal autonomy of LGUs since the real property tax is a local tax.

Furthermore, the NTRC sees possible pseudo-transfers of property ownership in order to avail of the real property tax privilege.

“A family homeowner who is not yet a senior citizen and qualified for the exemption may transfer the ownership, on record, of his property to a senior citizen so that the property will be exempted from the tax,” Isorena said.