Councilor to call for staggered tax hike

Cebu City map.
Cebu City map.

THE proponent of the revised Real Property Tax (RPT) Code in Cebu City has understood the plight of the business community and echoed its call for a staggered implementation of the tax increase.

Over Cebu City Hall’s online program “Pagtuki, Pagsusi, Pagsuta” on Wednesday, Feb. 14, 2024, Councilor Noel Eleuterio Wenceslao, chairman of the budget and finance committee, said he has the final draft of the Real Property Tax (RPT) ordinance, but he has not discussed it with the city council yet.

Wenceslao said he understands the plight of the business owners, saying that the City Government really needs to stagger the implementation of the increase in fair market values (FMV) of property in the city because a one-time increase would really be a burden to real property owners.

The FMV is the basis for the computation of the real property tax due.

Last August, SunStar Cebu reported that the proposed adjustment would see the FMV of properties in some prime locations in Cebu City soar by 200 to 3,200 percent.

By updating Cebu City’s RPT Code, the City sought to raise P10 billion to P15 billion in revenue. This, as it looked for ways to help fund its mammoth P50 billion annual budget for 2023, which is a 450 percent leap from the City’s around P9 billion annual budget in 2022.

In November 2023, the City Government had a public hearing, which was hosted by the Cebu Chamber of Commerce Industry.

During the event, they heard the call of various business owners who will be affected by the revision of the RPT Code, which involves the increase in the FMV of properties.

Wenceslao said the business owners requested to stagger the implementation of the increased FMV because it is too high.

Large property developer Ayala Land Inc. has opposed the large adjustments in FMV leading to an “astronomical increase” in real property tax due, calling the measure “unjust, excessive and confiscatory,” if passed into law, and a violation of the Local Government Code of the Philippines.

Among the properties of Ayala Land Inc. and its subsidiaries in Cebu are the Cebu IT Park in Barangay Apas and Cebu Business Park in Barangay Hipodromo, which hosts the Ayala Center Cebu mall and residential developments.

In 2006, the land where Cebu IT Park sits had a fair market value of P6,000 per square meter. But in the revised RPT code, its FMV would soar to P200,000 per square meter as it is now a highly commercialized area.

Robinsons Land Corp. (RLC) has also objected to the proposed “drastic” increase in fair market values of property in the city, saying a “cap in the effective increase in the RPT due and a gradual implementation of the bill should be put in place to avoid placing such an excessive burden to real property owners.”

RLC warned that the increase in the cost of ownership brought by the sharp increase in real property taxes could force property owners unable to afford the tax to sell their properties. RLC said it could also lead to defaults on home loan payments, a surge in rental rates, and reduced investment in real estate development, hitting the broader economy.

Wenceslao said that in the ordinance, he agreed to the request of the business owners, but as for the amount, he could not reveal it yet because it has not been discussed by the council.

“Hatagan nato og gamayng pagpahiluna, but we have to increase. There’s a longing for that but ato lang e staggered ang implementation,” Wenceslao said.

Wenceslao explained that if they increase right away, some property owners may not be able to afford it, especially those who are still recovering from the impact of Covid-19 and typhoon Odette (Rai).

But he added that there is also a need to protect the city’s interests because if taxes rise sharply, other cities may become more attractive, and business owners might relocate.

“Imbis naa unta tay gamay nga makuha nila, adto na nuon sa lain. (Instead of us getting a little more from them, their taxes will go elsewhere.) That’s why we need to protect that also,” Wenceslao said.

“Dapat naay (There should be a) win-win solution,” he added.

Wenceslao said he still needs to submit his proposal to the council for final deliberation.

He said the ordinance still needs to be discussed and a consensus reached by the councilors, which he hoped would be attained soon so the ordinance could be approved by March.

Wenceslao said that among all the highly urbanized cities in the Philippines, Cebu City has the lowest RPT rates because there has not been a revision for so long.

He said other cities in Cebu like Talisay, Lapu-Lapu, Mandaue and the Province were able to revise their rates.

The last time the Cebu City Government revised its real property assessment was in 2002. This was supposed to take effect on Jan. 1, 2003, but its implementation was postponed to 2006. 

Wenceslao said he cannot provide the reasons why Cebu City was not able to revise its tax code for so long, because he was not yet in the council back then.

He added that Mayor Michael Rama pushed for the revision because it is about time, saying the longer it takes, the more problems will arise due to the tremendous increase in FMV, making it even more difficult for real property owners to pay.

According to the Local Government Code (LGC) of 1991, the provincial, city or municipal assessor shall undertake a general revision of real property assessments every three years.

“Fair market value” is defined by the LGC as the price at which a property may be sold by a seller who is not compelled to sell and bought by a buyer who is not compelled to buy.


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