GOVPH

Taxes on property generally cover all types of recurrent and non-recurrent taxes and levies on the use of ownership, and transfer of property. These include (a) recurrent taxes on immovable property, (b) recurrent taxes on net wealth, (c) taxes on estates, inheritances, and gifts, (d) taxes on financial and capital transactions (e.g., stamp, registry fees, property transfer taxes), and (e) non-recurrent and recurrent taxes on property (e.g., betterment levies to capture land value increases) (OECD, 2021: ADB, 2020).

Pursuant to Section 212 of the Local Government Code (LGC) of 1991, there shall be prepared a schedule of fair market values by the provincial, city, and municipal assessors of the municipalities within the Metropolitan Manila Area for the different classes of real property situated in their respective local government units (LGUs) for enactment by ordinance of the Sanggunian concerned. Section 219 of the LGC further requires LGUs to undertake a general revision of real property assessments within two (2) years after the effectivity of the LGC and every three (3) years thereafter.

Real property tax or RPT provides the most stable own-source revenue for local governments and an important resource to improve service delivery and finance infrastructure projects (ADB, 2017). However, data shows that this source of income for local governments has not been fully maximized. The Department of Finance (2019) reported that local governments are losing P30.5 billion in revenues to outdated real property valuation alone. In particular, cities could have collected as much as P23.1 billion in incremental revenues from real property taxes had their schedule of market values (SMVs) been updated and in sync with international standards.