How the real property valuation reform can benefit Filipinos

Date Posted : December 15, 2019

How the real property valuation reform can benefit Filipinos

Date Posted : December 15, 2019

At the onset, it may admittedly be a little hard to fully grasp the multitude of benefits that Package 3 or the Real Property Valuation Reform can offer the ordinary Filipino.

After all, this proposed measure under the government’s comprehensive tax reform program is primarily aimed at introducing “vital reforms to promote the development of a just, equitable, and efficient real property valuation system.” Essentially, it is viewed to be one of the solutions to the problematic right-of-way (ROW) issues that have long stalled some of the government’s most crucial infrastructure projects over the past decades.

At present, the real property valuation system is rife with multiple, overlapping property valuations, which have complicated real property assessment and taxation. This problem has resulted in ROW compensation problems, project delays, cost overruns, as well as lengthy court litigation that have hampered the efficient construction of infrastructure projects.

Thus, the passage of Package 3 is crucial now more than ever to ensure the faster roll out of the Duterte administration’s flagship program—the ambitious, P8-trillion Build, Build, Build initiative. At the same time, the reform will also broaden the tax base used for property-related taxes of the national and local governments, thereby increasing government revenues without increasing the existing tax rates or devising new tax impositions.

Without a doubt, Package 3 offers significant benefits to the ordinary Filipino, businesses,
and the economy in more ways than one.

PRO-GROWTH

Infrastructure is touted to have the biggest multiplier effect on the economy as it creates jobs, unlocks land values, and induces further consumption and investment. As Package 3 promises to address ROW acquisition issues, it will help expedite infrastructure development, which is highly favorable for Filipino families, commuters, businesses, and investors.

PRO-INVESTMENT

A World Bank study cites land, considered a vital resource for any nation, to represent 50 to 75 percent of the national wealth. As Package 3 is aimed at developing a professional, credible, and transparent valuation system, it is seen to enhance investors’ confidence in the land and real estate market.

PRO-LOCAL GOVERNMENT

This measure can enhance local government units’ (LGUs) financial self-sufficiency through their increased capacity to generate revenues from real property tax without necessarily adopting new tax measures. At present, real property tax is contributing an average of 29 percent to LGU revenues due to outdated property values, which have hindered the growth in tax collections.

PRO-OFW

Outdated and conflicting valuations of real properties prevent Overseas Filipino workers (OFWs) and their families from making optimal investment decisions. Through Package 3, the schedule of market values (SMVs) will be regularly updated, which will make valuation closer to market prices and provide certainty in the real property market. Effectively, it will make purchasing low-cost homes more attractive to Filipino families.

PRO-SMALL LANDOWNER

Different standards to determine the cost and value of real properties have led to confusion among landowners. Package 3 aims to address this by adopting uniform standards and establishing an electronic database of real property transactions and declarations in the country. An updated and credible benchmark for valuation also protects landowners from being deprived of the full benefits that can be derived from their property.

PRO-TAXPAYER

Multiple, outdated, and overlapping methods of valuation put the Filipino taxpayers at a disadvantage. For instance, conflicting market values on land hamper the timely delivery of infrastructure projects due to valuation disputes. But having an updated and credible benchmark for real property valuation will help right-of-way acquisition stay on budget, thus avoiding added costs for taxpayers.

PRO-STUDENT AND PRO-TEACHER

Improving the real property valuation system and strengthening the collection of real property tax will increase LGUs’ Special Education Fund or SEF collections, which will support the expanding needs of public schools, such as the construction and repair of school buildings, payment and adjustment of salaries of public school teachers, and granting of scholarships. Package 3 will thus help the government invest more in human capital development, which has been one of the top priorities of the Duterte administration.

This article was published in the Philippine Daily Inquirer on December 15, 2019.


-oOo-

Date Posted December 15, 2019

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