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Wednesday, February 11, 2004
Osmeña: Election issue: unfair assessment for realty taxes
By Antonio V. Osmeña
Estatements
POWER TO DESTROY. Although the right to levy realty taxes for the support of government ranks first, the power to tax in the hands of an unwise government is tantamount to the power to destroy property values.
Cebu’s economic barometer, which is the real estate industry, must be provided with safeguards to protect the property owner against political exploitation and possible economic confiscation.
Nobody will disagree that the power to tax is a “necessary evil.”
If wisely used, it is the most important source of revenue upon which the strength and support of government depends and without which an owner’s rights may lack necessary protection and enforcement.
Today, the equitable distribution of the cost of government is ever a problem. As a basis for taxation, the government could either apply the benefit received theory or the ability to pay theory.
Under the first theory, taxes are imposed in proportion to the benefits derived from governmental services.
This theory, although fundamentally equitable, is not applicable in practice since those often in greatest need of community aid and support are generally least blessed with the possession of worldly (property) goods and hence unable to meet their share of the public expense.
For this reason, the principle “to each according to his needs and from each according to his ability to pay” is guiding and now accounts for the use of the ad valorem (according to value) tax system.
TAX RATE. To ascertain the amount of tax against a particular piece of property, a tax rate must be determined. To arrive at the tax rate, two factors are used: the budget or amount of money to be raised, and the total valuation of taxable property within the district.
The total amount to be raised by taxation divided by the total assessed valuation gives the rate. The rate applied to the value of a particular parcel of real estate gives the amount of taxes chargeable to it.
To illustrate, more than a decade ago, over 70 percent of the 37,000 hectares of Cebu City was declared as agricultural land, specifically the mountain hinterlands.
The remaining 30 percent are classified as either commercial or industrial land, where the value assigned to real property by a tax official is merely the opinion of that official as to its value.
Today’s rapid urbanization of Metro Cebu has encroached on agricultural land, which has been converted to residential, commercial and industrial estates, making many land assessments obsolete. Today the land along the coastal area of Cebu City has predominantly sustained the finances to meet the needs of City Hall.
UNFAIR. Our political leaders need to program an equitable assessment of land throughout the 37,000 hectares where agricultural land has continued to diminish. It is unfair for the central part of the city to subsidize the city’s budget, while high-end subdivisions and residents enjoy a low assessment in the mountain hinterlands.
Critics say that landowners have been protesting against the inequitable assessment of land and buildings. Unfortunately, none of the tax officials and government leaders is listening.
This realty assessment or tax rate should be an election issue. Engineer Carlos Co of the Cebu Chamber of Commerce and Industry should make a stand on this matter.
(February 11, 2004 issue)
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