April 21st, 2021
Salceda renews push for property valuation reforms to spur investments in real property, expedite infra construction
House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district), principal author of the Real Property Valuation and Assessment Reform (RPVAR) bill, which is Package 3 of President Duterte’s comprehensive tax reform program, has renewed calls for the Senate to urgently pass the reform, citing its potential benefits to property investments and to government infrastructure programs.
“The problem with faulty land valuation is that when government acquires right-of-way, things get litigious. We have to settle cases in court. That delays projects significantly, and it delays economic growth from the completion of those projects,” Salceda said.
“That’s why we need to fix property valuation as soon as we can. I am asking the Department of Finance (DOF) to finalize its amendments to the bill, so that the Senate can now move with it,” Salceda added.
Salceda’s remarks come in response to a gathering of allies of the reform today. The forum, held by the Foundation for Economic Freedom, highlighted the benefits of Salceda’s proposed reform to infrastructure, revenue generation, and economic activity.
The House has already passed its version of the reform in 2019.
LGUs to benefit from property valuation reform
Salceda explains that, under the current system, LGUs conduct valuation of properties for tax purposes, on top of some 20 or so other agencies that conduct separate valuations. This, Salceda says, confuses investors, results in court cases over right-of-way payments, and delays infrastructure construction.
Salceda adds that LGUs are unable to fully realize revenue potential from high-value properties.
“False land valuation for tax purposes is a subsidy to the rich. LGUs can always value properties correctly and set the tax rates to zero for small landholdings, farms, and residences. But keeping land values low for the rich is a giveaway. Remember, real property taxes are this country’s only wealth tax,” Salceda said.
“The LGUs will need the revenues. I think many of them are under the impression that they will have more free money because of the Mandanas case. That’s not true. Once the ruling is implemented, the national government is also giving them more obligations – obligations that they should be performing now in theory under the Local Government Code. These include health and education,” Salceda said.
“They will need the money.” Salceda added.
Salceda adds that LGUs can use property tax rates to push certain policies.
“Condominiums, tenements, and high-density properties should be taxed at much lower rates than, say, low-density exclusive villages in Metro Manila. That way, you push people to make better use of land. Green spaces, parks, and areas of civic activity should be exempt. Property taxation is a good way to reshape society and make it more equal,” Salceda explained
Salceda says he will be asking the DOF to brief him soon on its amendments to the reform.
“My senate counterparts are waiting for their amendments. It won’t move without their proposal, so I hope they finish it soon.” Salceda said.