City proposes up to 3,200% hike in real property market value as it eyes P15B in tax collection

File Photo
File Photo

THE market value of properties in some prime locations in Cebu City is expected to increase from 200 to 3,200 percent with the proposed revision of Cebu City’s real property tax (RPT) code, enabling the City to collect more in taxes.

After Cebu City Mayor Michael Rama vetoed the 2022 Real Property Tax Code last February, which the Cebu City Council had approved on Dec. 30, 2022, the Local Finance Committee has pushed another version of the revision entitled the 2023 Real Property Tax Code of Cebu City to the Council.

In the proposed ordinance, the proposed schedule of fair market values in all residential, commercial and industrial lots in the city was specified as the basis for the classification, appraisal and assessments in connection with the 2024 general revision of real property assessments.

According to Section 33 of the proposed 2023 Real Property Tax Code, before any general revision of property assessment is made, there shall be a prepared schedule of fair market values by the city assessor for different classes of real property situated in the city.

Schedule of fair market values, according to the definition of terms in the proposed ordinance, means an approved schedule of unit base market values for different classes of real property used by the provincial, city, or municipal assessors as basis for the appraisal and assessment of real properties in their respective assessment territorial jurisdictions for real property taxation purposes.

By adjusting the market value of real properties in Cebu City, as reflected in the proposed 2023 version of the revised RPT Code, the City targets to raise P10 to P15 billion in revenue.

The following are some of the prime locations in Cebu City with their current and the proposed schedule of fair market values:

Maria Luisa Estate Park Subdivision - Highland in Barangay Budlaan

Its current schedule of market value (SMV) is P2,500 and the proposed SMV is P35,000. The lot, which is subdivision lot, is considered as under special classification for lot classifications.

Sto. Niño Village in Barangay Banilad

Its current SMV is P4,000 and its proposed SMV is P30,000. Its lot classification is R1, or first class residential land

Cebu IT Park in Barangay Apas

Its current SMV is P6,000 and the proposed SMV is P200,000. Its classification is I1, or first class industrial land

Portion of Cebu Business Park under the jurisdiction of Barangay Hipodromo (Lot numbers 2, 1 to 4 to 22 Visayas Ave.)

Its current SMV is P16,300 and the proposed SMV is P245,000. Its lot classification is CBP1, or Cebu Business Park 1, which is under the special developed area

Colon Street (Osmeña Blvd. - D. Jakosalem St. in Barangay Sto. Niño

Its current SMV is P30,000 and the proposed SMV is P90,000. Its lot classification is C4, or fourth class commercial land

The proposed ordinance, if approved by the Council and signed into law by the mayor, will take effect 15 days following its complete publication in a newspaper of general or local circulation.

P15 billion

Local Finance Committee (LFC) Budget Officer Jerone Castillo said this legislative measure, which pushes for the long-overdue revision of the City’s RPT Code, would fuel and complement the Executive Department’s effort through its “Sayaw para sa Buhis” program to achieve the city’s P50 billion target annual budget for this year.

“This proposal alone is already quite big. But our expectation really is from the Sayaw para sa Buhis because there are very many who have not yet declared their property,” he told SunStar Cebu in Cebuano on Thursday, Aug. 24.

“They (taxpayers) just come forward; they declare, plus there is an (adjustment) in the market value. Imagine the impact on the city’s revenue stream,” he added.

The Strategic Assessment for Your Assets and Worth (Sayaw) para sa Buhis (for tax) is a special task force initiated to help Cebu City in tax collection through friendly persuasion that has among its targets the collection of accumulated delinquent RPT that has totaled P28 billion.

Castillo said the LFC’s proposed model for the RPT Code revision is “fair” and compliant with the law.

He said that in their 2023 version of the revised RPT, they adjusted only the market value (which he said is market-driven) and retained the current assessment levels–-a salient difference between their proposal for this year and their proposal in 2022.

This is to lessen the tax impact on the taxpayer, he said.

Castillo recalled that the vetoed ordinance supporting the 2022 version of the revised RPT Code contained adjustments in both the (a) market value of the property and the (b) assessment levels–an adjustment also permissible by law, and whose amount could be dictated by the city.

“We had the deliberation because gipaduso ang bag-o nga ordinansa (the new ordinance was to be pushed) and when another member of the LFC came in, particularly si Ma’am Tess (Maria Theresa Ceballos-Rosell, city assessor), there was a debate, so to speak. There was a serious discussion, but at the end of the day, the LFC found wisdom that it’s only the market value which will be adjusted to lessen the tax impact on the taxpayer,” he said.

Castillo said the proposed market value adjustment is compliant with the law, especially since the last adjustment of the city’s RPT Code was in 2003.

“The more economic development there is, their value will also rise. So, with that alone, there should be nothing to worry about because the forces in the market dictate this. It’s not us (city government),” he said.

“At that time, for example, a property in downtown Cebu City in 2002, maybe its market value then was around P10,000. After several years, definitely, the value of that would be more than times two already,” he added.

Asked how much in taxes real property owners would now be expected to pay should the proposed 2023 RPT rates be approved, Castillo said it would be better presented by an actual tax impact analysis, since the adjustment would be on a case-to-case basis, depending on the property.

Two decades old

It was stated in the proposed ordinance that the required revision of the real property assessments is every three years as provided in the Local Government Code.

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

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