Vous êtes sur la page 1sur 14

Draft

for discussion. Subject to change.

PACKAGE 3
Property Valuation & Tax Reform
Draft for discussion. Subject to change.

Outline of the Presentation

I What is wrong with the current system?

II Why the need for reform?

III What policy reform is needed?

IV Benefits of the Reform


Draft for discussion. Subject to change.

I. What is wrong with the current system?

Multiple, overlapping valuations

Outdated valuations used for governmental purposes, especially for


national and local taxation; LGUs comingle valuation with taxation.
Only 38.8% LGUs and 50.4% RDOs have updated values.

Costs incurred, revenues foregone: overvaluation when government


pays, undervaluation when government collects

No single agency responsible for ensuring that valuations are


completed in accordance with international standards

Absence of a comprehensive real property electronic database


Draft for discussion. Subject to change.

II. Why the Need for Reform?

Low tax intake Average (FYs 2014-2017) Average (FYs 2014-2017)

and undermines 30.73% 0.36% GDP Growth in FY 2017: 6.7%


revenue RPT to Local RPT to GDP Main contributors to the country’s
Sources economic growth:
generation 1. Manufacturing – 19.45%
FYs 2013 to 2016 For FY 2016
2. Trade Sector – 18.28%
RPT Collection
Efficiency in FY 2016 71% NCR: 87% 3. Real Estate, Renting & Business
RPT Collection Highest RPT Collection Activities – 13.19%
All LGUs: 71% Efficiency Efficiency
Cities: 73% BSP: residential real estate prices rose by 5.7
For FY 2016 Average (FY 2014-2016)
percent year-on-year in Q4 2017
Provinces &
Municipalities: 68%
₱102.16B 0.23% NG Real Property Transfer Tax Types:
CGT, CWT, FWT, DST, DN, ES
NG Real Property Property Transfer
Transfer Taxes Taxes to GDP
Draft for discussion. Subject to change.

Multiple, Overlapping Valuations


q 23 NGAs doing/requiring valuations A property may have as many values
1,715 local government units as there are valuers/valuing agencies

q Each agency using own systems & methodologies:

o wide disparities between the schedule of zonal values (SZV), schedule of market values (SMV),
& private appraisers’ values
o varying values for the same piece of property
o lack of confidence in the land valuation system

q Notable disparities noted in 19 sample cities*:


o SMV < SZV by 13% - 94%
o SZV < Private Valuation by 5% - 930%
o SMV < Private Valuation by 187% - 7,474%

*Based on a 2004 Comparative Study of Land Values in Selected 19 Cities & Municipalities.
Huge variance have been noted in urban areas.
Draft for discussion. Subject to change.

Real Property Tax to GDP Ratio


FY1972 - FY2017

All Provinces, Cities, and Municipalities


Source: DOF-BLGF

0.60%

0.50%

0.40%

0.30%

0.20%

0.10%

0.00%
'72
'73
'74
'75
'76
'77
'78
'79
'80
'81
'82
'83
'84
'85
'86
'87
'88
'89
'90
'91
'92
'93
'94
'95
'96
'97
'01
'02
'03
'04
'05
'06
'07
'08
'09
'10
'11
'12
'13
'14
'15
'16
'17
Enactment of the Local Government Code of 1991
(RA 7160)
Draft for discussion. Subject to change.

RPT-to-GDP of Other Asian Countries

2.5%
2.2%
2.1% 2.1% 2.1%
2.0% 2.0%
2.0%

1.5%

1.0%
0.7% 0.7% 0.7%
0.6% 0.6% 0.6% 0.6% 0.6%
0.5% 0.5% 0.5% 0.5%
0.5% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4%

0.0%
2009 2010 2011 2012 2013 2014

Japan Korea Malaysia Philippines


Draft for discussion. Subject to change.

Sample of Huge Disparities in Valuations

Ayala Avenue, üSMV: Php40,000/m2 (1996)


Makati City üZV: Php439,000 (CR)/m2 (2017)

700,000.00 18x üMV: Php700,000/m2


600,000.00
500,000.00
400,000.00
Legaspi Village, üSMV: Php29,000/m2 (1996)
300,000.00
200,000.00
Makati City üZV: Php320,000/m2 (2017)
100,000.00
- 13x üMV: Php390,000/m2
MV
SZV
SMV E. Rod., C5, üSMV: Php35,000/m2 (2017)*
Ayala Avenue Legaspi Village E. Rodriguez Ave Jr. – C5
Quezon City ü ZV: Php100,000 (CR)/m2 (2012)

Sales Listing gathered in the internet; value estimate on land


based on abstraction/extraction method.
4x üMV: Php130,000/m2
*Under TRO (April 2017)
Draft for discussion. Subject to change.

How outdated are government valuations?

Only 38.8% of LGUs have updated SMVs


There are 93 non-compliant cities and 46 provinces as of June 2018. LGUs
BIR 50.4% of RDOs with updated Zonal Values
within the last 5 years. 65 RDOs are still in the process of revising.
Draft for discussion. Subject to change.

Proven Effect of Outdated Values

Unrealized revenues and socio- Conflicting land values result in


economic benefits from delayed Lengthy court litigations arising
right-of-way compensation
from valuation disputes

1 2 3
projects problems

4 5
Projects are delayed Cost overruns
Draft for discussion. Subject to change.

III. What Policy Reform Is Needed?

Adopt international standards, rationalize the process

Establish single valuation base for taxation, benchmark for other


purposes

Insulate valuation from undue politicization; LGUs shall continue to


regulate tax rates and assessment levels.

Recentralize the neglected function of LGUs; improve oversight by NG

Establish comprehensive database to support valuation function


Draft for discussion. Subject to change.

Separate Valuation from Taxation

TECHNICAL FUNCTION P O L I T I C A L F U N C T I O N

VALUATION ASSESSMENT TAX RATE BUDGET


LEVEL
Maximum Levels Basic Tax
•Residential = 20% Maximum Levels
ANNUAL
•Agricultural = 40% •1% - Provinces/
•Commercial = 50% Municipalities
•Industrial = 50% •2% - Cities
•Mineral = 50% 1% SEF
Draft for discussion. Subject to change.

IV. Benefits of the Reforms

Single Valuation Base


ü
Uniform Standards Comprehensive Database

1 2 3 4
Increased Revenues

Higher Investor Confidence Guaranteed Benefit of

5 6 7 8
Improve Local Autonomy Reduced Government Costs
Education Sector
Draft for discussion. Subject to change.

Thank You!