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Publication Detail
TRJ 2006 Vol XVIII No 1b: Real Property Tax Gap: An Update

The study estimates the basic Real Property Tax (RPT) gap from 1993 to 2004 per level of local government unit (LGU). The RPT gap is the aggregate amount of uncollected real property tax for the current and previous year. On the average, LGUs registered an overall collection efficiency (CE) of 58% from 1993 – 2004. This indicates that about 42% of the realty tax due remained uncollected during the period. By level of LGU, on the average, provinces registered CE of 58% from 1993 – 2004; followed by cities with 57% average CE. Meanwhile, the average CE of municipalities within Metro Manila fluctuated from 1993 to 2004 ranging from a high of 77% in 1994 to a low of 44% in 2001 and 2002. An NTRC study identified the problems deterring the growth of the basic RPT, among others, as follows: (a) poverty of taxpayers; (b) political influence, particularly in the areas of real property valuation and assessment; (c) financial dislocation due to calamities and other disasters; (d) limited use of civil remedies, such as the sale of delinquent properties at public auction; (e) undervaluation of property values; and (f) dominance of the IRA in local government revenues. On the other hand, the LAMP policy study likewise noted the problems in property valuation and assessment which have affected the effectiveness of the RPT as follows: multiple and conflicting valuation methodologies; absence of uniform appraisal standards and provisions for formal education of assessors/appraisers; political influence; and limited access to public records and use of information technology in the appraisal process. The findings and recommendations of the LAMP would also serve as a basis for the comprehensive restructuring of the present land administration system, of which the real property taxation is an integral component, i.e., adoption of single valuation base for all taxes on real property and uniform valuation standards; and minimal political influence in the valuation processes. Relative to the LAMP proposed valuation reforms, the following recommendations of the NTRC studies are reiterated: (a) enjoin the local chief executives to enforce the civil remedies which is largely a matter of political will; (b) consider the creation of a delinquent accounts section in the Treasurer’s Office; (c) conduct additional trainings and seminars on the technical aspects of property appraisal which are essential to the improvement of RPT administration; (d) establish a complete and accurate real property database in LGUs; (e) synchronize assessment records with the collection records of individual taxpayers; (f) use of computer in property tax administration should not be limited to data storage and mathematical computations but also in the valuation process such as its application for mass appraisal; (g) invest in additional personnel for purposes of records keeping; and (h) strengthen linkages with other officials and agencies such as the Register of Deeds and real estate dealers who are sources of property information.

National Tax Research Center
Authors Keywords
National Tax Research Center; real property tax;
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Published in 2006 and available in the NTRC Library or Downloaded 140 times since November 25, 2011
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