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Publication Detail
TRJ 2006 Vol XVIII No 6b: Buoyancy and Income Elasticity of Real Property Tax

The paper assesses the responsiveness of the real property tax (RPT) to the increases in assessed value from 1995 – 2004. Ideally, an expansion in the tax base should result in the growth of revenue. The results of the study may serve as inputs to policy makers in considering tax proposals that will have significant effects on both the taxpayers’ tax burden and government revenue collection. From 1995 onwards until 2003, revenue from RPT more than doubled from P 4.3 billion in 1995 to P 11.2 billion in 2003 growing at an annual average of 13.11% with its highest growth of 27.41% registered in 1997. In 2004, however, it decreased to P10.7 billion or by 5.23%. On the other hand, the assessed value more than tripled from P 470.4 billion in 1995 to P1,438.1 billion in 2004 registering an annual average growth of 13.35%. As can be noted, the assessed value and collection did not grow in parallel lines with each other. There were years when collection inefficiency surfaced such that despite a broadened taxable base brought by either a general revision of assessments or by other measures such as continuous tax mapping to account for every existing real property, the collection hardly kept pace with the growth in assessed values. This means that a big portion of the collectibles remained uncollected. The buoyancy of the RPT relative to assessed value is estimated at 0.789 and its elasticity at 0.776. As can be observed, there is little difference between the buoyancy and elasticity coefficients of the RPT which implies that on the average, the general revisions of the property assessments undertaken by the LGUs within the period did not significantly contribute to the total tax revenue growth. This means that a broadened taxable base is no assurance of an increased tax collection. With or without general revision of assessments, collection will depend more on the efficient and effective tax collection enforcement mechanisms being employed by LGUs.

National Tax Research Center
Authors Keywords
National Tax Research Center; real property tax;
Download PDF Number of Downloads
Published in 2006 and available in the NTRC or Downloaded 132 times since November 25, 2011
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