LGUs hit Miriam proposal to abolish real estate taxes

The proposal of Senator Miriam Defensor-Santiago to abolish real estate taxes was met with opposition by local government units (LGUs), which said that the move would undermine their authority and worsen the current conditions.

"ULAP (Union of Local Authorities of the Philippines) believes that the proposal undermines the authority of LGUs in levying real property tax on lands within their jurisdiction," the group said in an email to GMA News Online.

ULAP is the umbrella of all the leagues of local government units and locally elected officials. Under the law, LGUs are the collectors of real estate taxes.

The statement comes on the heels of a push made by Santiago during the second round of the Pilipinas Debates 2016 held in Cagayan de Oro City for the abolition of the tax.

"The [local] real estate tax should be abolished,” she said, pointing out that the government may instead just increase the national-level property tax.

According to ULAP, these kinds of local taxes are "significant sources of funds for LGUs..."

Citing a Policy Research Paper of Maita Gomez, ULAP said that "In general, real property taxes (RPT) account for the bulk of internally generated tax revenues, with local business taxes coming in second. For most LGUs, the tax on ownership of real property is the most significant internal source of revenue."

Alongside the LGUs, local taxes are also shared with the Internal Revenue Allotment (IRA). The current computation of the IRA takes into consideration the land area, population, and equal sharing of an area.

"The computation makes it unfair for LGUs which have small land area and does not take into consideration the revenue generation capacity of LGUs. Thus, the proposal of abolishing the RPT (real property taxes) will further worsen the situation for these kind LGUs," ULAP said.

The organization said, however, that it encourages more studies on the issue to shed more light on the impact of removing RPTs from the income sources of LGUs, as well as the potential lost and opportunities on service delivery and social costs that may come with the proposal. —JST, GMA News