How will the Proposed Valuation Reform Act impact on taxpayers?

Updating the SMV and conducting the general revision of property assessments are necessary components of effective and efficient real property tax administration in any LGU to arrive at a fair and equitable Real Property Tax (RPT). The RPT, being a recurrent tax, is dependent on three elements: (1) market value, (2) assessment level, and (3) tax rate. An increase in the value of a real property would increase the RPT, and conversely, a decrease in the value will lead to a decrease in RPT.

This result, however, could be addressed by LGUs’ authority to push back the resulting increase in tax since they have the power to lower or increase the tax rate and assessment level, according to their budget goals and priorities. In the case of non-recurrent taxes, usually transfer taxes, there will be a proportionate increase in the tax as a result of the increase in values, since there are no adjustment mechanisms to lower CGT, DST, Estate Tax, Donor’s Tax, local transfer tax, etc.

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