Recto seeks to plug holes in land tax administration

No less than P100 billion was lost by the National Government in 2004 and 2005 due to an outdated and flawed land valuation and taxation system thus, frustrating government in its effort to increase revenues from the land sector, this was the assessment made by Sen. Ralph Recto recently.

Recto, chairman of the Senate committee on ways and means, based his view from the National Tax and Research Center (NTRC) saying, "the losses were caused by systemic and procedural loopholes in the land tax administration."

The re-electionist senator warned that the government is set to lose another P50 billion this year if reforms in land administration are not implemented soon.

 "The resource hemorrhage must stop before our currently inefficient land valuation system undervalues the country’s remaining land resources to the wild cheers of vociferous land speculators," Recto warned.

Recto said the government only collects an average of  P9.5 billion in real property taxes annually, a far cry from the estimated worth of P47 billion to P50 billion that should have gone to the national coffers yearly. "Obviously, said amount excludes losses incurred due to graft and corruption," the senator continued.

Recto said among the causes of dismal collection in real property taxes are:  non-reporting or non-declaration of property; use of another address in area where zonal value is lower; misclassification of property; splitting of value to avoid VAT; under declaration of property value; weak enforcement; out-of-date property assessment; antiquated administrative tools; partial inventory of real property; multiple titles among property owners and boundary disputes.

 He said government and private policy planners have corrected these flaws by proposing a landmark measure in Congress that would integrate and strengthen all government efforts directed at improving the country’s land administration and management systems.

One immediate measure is the Land Administration Reform Act, or the LARA bill, which Recto sponsored under Senate bill 2485, and is now under the committee on environment and natural resources chaired by Sen. Pia Cayetano. Five other senators are also pushing for the passage of the said bill.

The bill calls for the creation of a super agency that would oversee effective and efficient land tax administration and make land registration and titling affordable, reliable and expeditious. LARA also seeks to curb rampant corruption by improving the "efficiency, effectiveness, transparency and accountability of land administration services."

 Recto said various government agencies directly involved in land valuation and taxation should be integrated and put under one roof to expedite mapping, land survey, classification, disposition, registration and taxation of private and public lands.

 Aside from Land Registration Authority and the Register of Deeds of the Department of Justice, other agencies involved in land administration are Land Management Bureau and Land Management Services of the DENR and National Mapping and Resources Information Authority (Namria).

Recto stressed a big amount of fresh revenues could be realized if the current system of land taxation and valuation is improved to reflect their "real" values. "Panahon na para i-update natin ang ating proseso at sistemang ginagamit sa pa-lupa. We need to re-calibrate these values and make it attuned to the present times," Recto said.

The senator explained because of the flawed and weak land valuation system, many properties are not taxed property and worst, are not taxed at all. He said the flawed land taxation has also unnecessarily victimized small and medium property owners who are made to pay a fortune for a small piece of land.

He said the country boasts of land assets worth P3.24 trillion while building properties are placed at P1.14 trillion.

But Recto said these are undervalued since the potential market value of the country’s land assets, both for private and public lands, is actually worth P8.81 trillion while building properties have a value potential of  P1.53 trillion.

 "The big discrepancy between the supposed current values and its actual potential could be corrected by overhauling the present system of land valuation and taxation. And everyday that the needed reforms are stalled, millions worth of revenues are being blown away," the senator ended.