Committee to revise real property value, tax rates formed

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Monday, April 21, 2014


CEBU City Mayor Michael Rama had a change of heart and wants a general revision of real property taxes.

The mayor’s decision came after the Department of Finance's Bureau of Local Government Finance (BLGF) found that the Cebu City’s Schedule of Market Values (SMV) is outdated by 11 years.

The Mandaue City Treasurer's Office is also pushing for an increase in property market values. “Right now, the values are not commensurate to how the city is developing,” City Treasurer Regal Oliva told Sun.Star Cebu yesterday.

The BLGF found that Mandaue City’s SMV has not been updated in 22 years.

The SMV determines how much real property tax a landowner needs to pay the local government.

“I wish not to get into this matter (revision of SMV and real property tax assessment) but they have highlighted it,” Rama said. He added that as mayor, he cannot refuse to undertake a measure that is meant to improve the City.

Rama opposed previous proposals of the City Assessor’s Office to update the SMV in consideration of landowners.

But yesterday, after the BLGF gave a “poor” rating to Cebu City’s 2012 fiscal performance, Rama formed a committee to conduct the general revision of the SMV.

The committee is composed of the Local Finance Committee, assessor's office, former city councilor Jose Daluz III (head of City Hall's committee on awards), and former city councilor Eduardo Rama Jr., who is now the head of the barangay affairs unit.

Consultation

Rama ordered the committee to consult all 80 barangays in Cebu City before coming up with new real property tax rates.

He did not impose a deadline for the committee.

The Cebu City Assessor's Office earlier proposed to raise the tax on residential properties to 4.5 percent from 2 percent; 20 percent from 10 percent for commercial, industrial, mineral and timberland properties; and to 8.5 percent from 4.5 percent for agricultural land.

The Local Government Code requires local government units to revise property assessments every three years.

Mayor Rama said, however, that he is not worried about the BLGF’s finding that the City has underutilized its almost P1 billion Internal Revenue Allotment (IRA) for local development projects. He said the funds remain with the City's coffers.

Mandaue’s adjustments

Updating Mandaue City's property market values, Oliva said, will increase the local government's revenue by 60 to 100 percent or an additional P200 million to P300 million.

Oliva said the City Assessor's Office is making the adjustments in property market values.

He noted that under the existing market values, lots in a subdivision in Barangay Banilad are still valued at P200 to P300 per square meter. He said the lots are actually sold at P15,000 to P17,000 per square meter.

Increasing the property market value will mean raising real property taxes. But to avoid driving away investors, Oliva said, the City may have to decrease the tax rate.

“I believe we would still be competitive. The tax rate will still be lower compared to other cities but not way too low,” he said.

Public hearing

Oliva said a public hearing for a proposed ordinance raising the city's property market values was held two years ago, but few attended.

“We will have to conduct another public hearing,” he said.

The City Treasurer's Office has automated its tax monitoring process to improve its tax collection.

In the neighboring city of Lapu-Lapu, the DOF noted the local government's failure to use up all its development funds which amounts to 20 percent of the City's IRA from 2010 to 2012.

The City's funds for development projects may not have been exhausted but Mayor Paz Radaza, in a phone interview, said the city has benefited from development projects funded by the Lapu-Lapu lone district representative.

Former congressman Arturo Radaza, the mayor's husband, served as the district representative from 2010 to 2013. Their daughter, Aileen, replaced him after winning the May 2013 elections.

“We partner with the Office of the District Representative in implementing development projects,” she said.

Based on the preliminary assessment of the City's fiscal performance from 2010 to 2012, by the BLGF, the City Government showed improved collections of locally sourced income.

The agency noted the City's low dependence on IRA.

The BLGF made a preliminary assessment of the fiscal performance of all local government units in the country from 2010 to 2012.

Published in the Sun.Star Cebu newspaper on April 22, 2014.

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