Diokno highlights the need to strengthen real property taxation to boost LGU financial capacity

Finance Secretary Benjamin E. Diokno has highlighted the need to strengthen real property taxation to boost the financial capacity of local government units (LGUs) during the Key Stakeholders’ Dialogue on Collaborating for Local Government Commitment to the Local Governance Reform Project (LGRP) on December 11, 2023.

“[W]e must strengthen the potential of real property taxation to empower our local units and, in turn, stimulate economic activity at the local level,” Secretary Diokno said in a recorded message.

Due to financial constraints, LGUs struggle to deliver swift and efficient public services as frontline offices of the government.

According to the Finance Secretary, real property taxation is a potent tool for wealth distribution.

He instructed LGUs to update assessments, improve tax collection processes, and embrace digitalization to improve efficiency, transparency, and accountability.

“To our esteemed Treasurers, Assessors, members of the Sanggunian, and with the leadership of the Local Chief Executives, I urge you to explore innovative and efficient ways to enhance real property taxation through the opportunity provided by the Local Governance Reform Project,” Secretary Diokno said.

The LGRP is a four-year loan project funded by the Asian Development Bank (ADB) that seeks to strengthen the revenue generation capacity of LGUs, improve local government revenue mobilization, and strengthen local public service delivery and governance.

The $26.5 million-loan will help LGUs across the Philippines boost revenue by adopting new digital tools for local real property tax valuation and collection.

To ensure the successful implementation of the project, the Department of Finance – Bureau of Local Government Finance (DOF-BLGF) committed to deliver technical assistance to LGUs.

This includes coaching and mentoring, Electronic Collection and Payment System guidance, and Tax Impact and Compliance Studies to enhance their respective local property valuation systems.

“Your active involvement in the pilot phase is critical to the success of the reform, and we appreciate your commitment to being a pilot local government. This will blaze a trail for many other local government units in the future. At the same time it will allow us to finetune the program’s implementation down the road,” Secretary Diokno said.

The two-day executive development program aims to underscore the vital role that LGUs play in governance–– particularly in revenue generation through real property tax.

The program was designed for the Local Chief Executives (LCEs) of the 20 pilot LGUs, including the Chairperson of the Ways and Means Committee, Treasurer, and Assessor.