In celebration of its 34th anniversary, the Bureau of Local Government Finance (BLGF), in partnership with the Asian Development Bank (ADB), held a webinar entitled “Mobilizing Resources Through Property Tax: Local and International Perspectives” last 21 October 2021. Attended by officials and personnel from national government agencies (NGAs), local government units (LGUs), local treasurers and assessors, civil society organizations, academe, and other stakeholders, the webinar tackled the context and best practices on property taxation, land value capture, and updates on the ongoing property tax reform in the Philippines.
“Real property is considered the most important natural resource and the biggest financial asset of a country’s wealth. However, LGUs fail to maximize the possible financial contribution that real properties may provide,” said BLGF Executive Director Niño Raymond B. Alvina as he formally started the event.
Executive Director Alvina highlighted that improving the quality of valuation of LGUs and making the revisions frequent, efficient, transparent, reliable and attuned to market developments, will impact favorably the revenue generation and resource mobilization of the LGUs to fund service delivery requirements. Likewise, exploring a possible enabling policy environment that will allow both local and national governments to harness the benefits from increased property values, derived from capital investments and infrastructure projects.
In his keynote speech, Secretary of Finance Carlos G. Dominguez mentioned the importance of the real property tax, as one of the most important fiscal tools in this time of globalization and competition, that offers a progressive source of revenue for the local government. Secretary Dominguez added that real property taxation, partnered with a credible real property valuation system, will help LGUs improve their revenue-generating capacity.
Likewise, ADB Director Jose Antonio Tan III emphasized in his keynote speech that real property taxes are the most important and most dependable source of locally sourced revenues of LGUs, making it the vital financing source for the local public services and infrastructure.
In the panel presentation, Duke University Professor Roy Kelly, ADB Director Abdul Abiad, and ADB specialist and consultants Mr. Brian McAuley, Ms Sissie Fung and Mr. Go Nagata, presented the international and local context of property taxation and the concept of Land Value Capture (LVC).
Speaking from the United States, Professor Kelly discussed that property tax is a good instrument in the post-Covid recovery economy that governments may use.
“Recent OECD reports show that the property tax is probably the least distortive tax compared to consumption taxes, personal income taxes, and corporate income taxes. So, in this period of post-COVID recovery, we are looking for instruments that will cause the least distortions in the economic recovery,” said Professor Kelly.
Mr. McAuley and Ms Fung presented the Benchmark Study for Property Tax Reform in South-East Asia, which provides analysis on the performance of property taxes and the opportunities for reform and improvement based on current policies and implementation guidelines of Cambodia, Philippines, Thailand, and Viet Nam. Mr. Nagata, on the other hand, emphasized the importance of domestic resource mobilization as the governments need to safeguard sufficient financial resources to contain the spread of Covid-19, procure safe and effective vaccines and get the economy back to a sustainable recovery track without losing market confidence.
ADB Director Abiad discussed the concept of beneficiary-funding and the LVC mechanism and its applicability in the local context and existing legal framework in the country. He mentioned that many governments and cities in the region recognize the problem of congestion and poor accessibility and are accelerating investments in mass rapid transit; however, these infrastructure projects are expensive.
“Adopting a beneficiary funding perspective can create a virtuous cycle, that allows cities to fund and roll out a wide transport network over many years. Investments in mass transit improve accessibility, which raises property values. If one can retain even just a portion of the increased values and invest it to keep the network growing, this improves accessibility further, raising property values further, and so on,” he added.
Union of Local Authorities of the Philippines (ULAP) President and Quirino Governor Dakila Carlo Cua, Philippine Institute for Development Studies (PIDS) Former Senior Research Fellow Dr. Rosario Manasan and Research Fellow Dr. Charlotte Justine Diokno-Sicat served as panel reactors and gave their insights and experiences in real property taxation of the LGUs and discussed key recommendations. Governor Cua agreed that local chief executives have to be strategic yet comprehensive in their approach to improve their local tax collection and that there is room for improvement in the development of policies. Dr. Manasan recognized that the webinar is timely and relevant with the push towards greater decentralization as brought about by the Supreme Court ruling on the Mandanas-Garcia petition and the need to improve fiscal sustainability in the aftermath of the Covid-19 pandemic. While Dr. Sicat noted the need for improvement on tax administration such as updating of schedule of market values that will result in a better collection for the LGUs.
In closing, BLGF Deputy Executive Director Atty. Flosie Fanlo-Tayag shared updates on the ongoing property tax reform proposal in the Philippines.
This webinar is the most wide-ranging online event of the Bureau as it was participated by 1,917 attendees via Zoom and 5,017 individuals watched the webinar via official Facebook page, and is in line with its celebration of 34th Anniversary with the theme, “Improving Local Finance, Empowering Local Governments Towards Sustainability.”