CRIPPLING EFFECT: Extended 40% RPT discount may ‘weaken’ city services

By Mariela Angella Oladive

Iloilo City Budget Officer Viminale Capulso has raised concerns that extending the 40 percent real property tax (RPT) discount until 2028 could severely impact the city government’s ability to deliver essential services.

During a committee hearing on Friday, Aug. 22, Capulso said the proposed extension—while offering temporary relief to taxpayers—would significantly weaken the city’s fiscal capacity.

“Right now, it may not be apparent to those who can afford to go to private hospitals, but with respect to our constituents who depend on us for social and educational services, we will have to reduce,” she said.

“We can either cut the number of beneficiaries, the period, or the amount of assistance given to the people. We may also reduce operating expenses and the maintenance of city hall offices. Based on the deficit of PHP600 million, it would reduce the capacity development of our employees,” she added.

City Treasurer Jinny Hermano explained that the city’s budget deficit stems from a mismatch between projected revenues and budget requests for 2026.

While city departments submitted proposals totaling PHP5.1 billion, the Local Finance Committee recommended only PHP4.5 billion based on expected collections.

Hermano emphasized that increasing RPT collections is crucial for the city to meet funding needs and sustain vital services.

Capulso echoed the concern, saying, “It mitigates the capacity of the city government to be effective… and will not be beneficial to the people.”

She also pointed to the Supreme Court’s Mandanas-Garcia ruling, which increased the share of internal revenue allotment (IRA) for local governments but devolved more mandated social services—further straining city resources.

Capulso said the city has managed so far through the Local Finance Committee’s strict tax collection and financial management programs.

Councilor Rex Sarabia noted the growing cost of operations while revenues remain flat.

On July 4, Mayor Raisa Treñas-Chu endorsed a proposed ordinance seeking to extend the 40 percent RPT discount until 2028 to ease the impact of a 300 percent property tax increase.

The measure, certified as urgent, aims to amend Ordinance Nos. 2023-226 and 2024-235.

If approved, it would allow property owners to continue paying only 60 percent of their assessed RPT until 2028, with the full implementation of the new rates deferred to 2029.

The discount, however, will not apply to idle lands, which will remain subject to the full ad valorem tax.

The ordinance also proposes to delay implementation of the updated Building Assessment Schedule until Jan. 1, 2029, to soften the impact of higher assessed construction costs.

The city government implemented its first major RPT increase in nearly two decades in 2024 to reflect current market values and comply with Republic Act 7160, or the Local Government Code, which requires local governments to update property assessments every three years.

The Commission on Audit has repeatedly urged Iloilo City to revise its outdated fair market values to prevent revenue losses and comply with legal standards.

However, steep increases in tax bills triggered backlash from property owners and business groups, prompting the city to grant a 40 percent RPT discount on land payments through 2026.

Present during the hearing were City Councilors Alan Zaldivar, Frances Grace Parcon, Irene Ong, Nene De Llana, Romel Duron, Mandrie Malabor, Lyndon Acap, Miguel Treñas, and Rudolph Jeffrey Ganzon.

Also in attendance were representatives from the City Legal Office, City Accountant, and City Assessor.