MANILA, Philippines — The Department of Finance (DOF) has expressed support for pending legislative bills seeking to reform the country’s real property valuation system to attract more investments and generate additional revenues for local government units (LGUs).
In separate letters to Sen. Panfilo Lacson, House Speaker Gloria Macapagal Arroyo and Albay Second District Rep. Joey Salceda – authors of Senate Bill 44, House Bill 2207 and House Bill 68, respectively – Finance Secretary Carlos Dominguez said the lawmakers could count on the DOF’s support for their respective bills, citing their benefits to the property market.
“Essentially, real estate is the most valuable asset and biggest financial resource. But its contribution to government revenues, particularly for local governments, has remained dismal due to outdated schedule of market values (SMVs), poor collection efficiency and tax administration and lack of uniformity in the valuation of real property,” Dominguez said in his letter.
Thus, the finance chief said there is a need to put in place an equitable, efficient and transparent valuation system “to stimulate the property market, attract investments, improve government’s resource mobilization through property taxation, and foster greater confidence in the real estate sector.”
According to Dominguez, the proposed bills lay out the fundamental valuation reforms already being pushed by the Duterte administration under Package 3 of the Comprehensive Tax Reform Program.
He said the bills filed by Salceda, Arroyo and Lacson all aim to adopt international standards in real property valuation.
Dominguez said they also seek to strengthen local autonomy by setting up a single valuation base for taxation and benchmarking purposes, therefore “insulating the valuation process from politics as LGUs will continue to regulate tax rates and assessment levels, improving the oversight functions of the national government, and establishing an electronic database to support valuation.”
However, Dominguez, in his letter, also provided some recommendations to further enhance the proposals.
Among these is the establishment of a Real Property Valuation Service under the Bureau of Local Government Finance, an attached agency of the DOF.
With the BLGF serving as the lead agency, Dominguez recommended the removal of the provision in SB 44 creating a Regional Technical Committee (RTC) on Real Property Valuation to streamline the review of SMVs.
The DOF has also added a proposed provision which will bar an LGU from receiving any conditional or performance-based grants or any form of credit financing from the national government in cases when it fails to update its SMV and conduct a revision of property assessments.
Dominguez also pushed for a provision requiring local assessors and other local officials involved in real property valuation to undergo training under the Philippine Tax Academy, automate their operations and adopt a tax mapping technology.
On the provision pertaining to the preparation of the SMVs, he recommended that a section be included stating that the process should include the approval and publication by the secretary of finance.
Dominguez said the bills should also clarify that the publication of the local ordinance containing the new and revised assessment levels and tax rates should be the responsibility of LGUs.
He said the secretary of finance should no longer endorse qualified persons for the appointment of local assessors, considering that the law already requires assessors and assistant assessors to be licensed.
The finance chief further recommended the inclusion of a provision on the mandatory constitution of the Local Board of Assessment Appeals to ensure that available redress mechanisms are in place.