Iloilo City mayor moves to soften 2029 tax shock

By Rjay Zuriaga Castor

Iloilo City Mayor Raisa Treñas-Chu is pushing for a 2 percent adjustment in real property tax (RPT) to shield property owners from steep increases as the city prepares to implement Republic Act 12001, or the Real Property Valuation and Assessment Reform Act (RPVARA).

The proposed 2 percent adjustment is well below the law’s 6 percent cap on RPT increases triggered by the first application of a newly approved Schedule of Market Values (SMV).

RPVARA, a landmark reform law signed in 2024, overhauls how the country values and assesses land and buildings for RPT purposes. It requires all real properties — whether taxable or exempt — to be valued at current market value using the Philippine Valuation Standards, replacing outdated assessment records with figures based on actual comparable sales.

Under the law, LGUs must prepare and regularly update SMVs for their areas, listing official market value ranges by zone and land use. These SMVs require at least two public consultations and must be approved by the Secretary of Finance.

RPVARA also mandates that every LGU assessor’s office update property valuations every three years.

From March 30 to April 1, the Iloilo City Assessor’s Office, led by City Assessor Cesar Z. Jalbuena Jr., held a three-day public consultation on the proposed SMV.

The city government said the consultation drew representatives from national government agencies, the real estate and banking sectors, business and private sector groups, and residential homeowners.

“The forum is only for the valuation side, which is the updating of values,” the city government said.

It clarified that taxation issues will be taken up separately by the City Council once the SMV is approved and certified by the Secretary of Finance.

The Local Finance Committee will also conduct a Tax Impact Study before the approved SMV is endorsed to the City Council.

“This is where the adjustment on the assessment level comes in. It doesn’t necessarily mean it will increase, it is possible that it can be retained or lowered from the current rates. It will heavily depend on the approval of the Department of Finance on the proposed SMV, and discussions after approval,” the city government said.

Under Section 55 of the RPVARA Implementing Rules and Regulations, the City Council may impose a cap on RPT increases in the years following the initial 2024–2028 period.

This means that even after the 6 percent cap in the first year of the new SMV’s application, the city or municipal council can still pass an ordinance limiting RPT increases in subsequent years.

The city government framed the revaluation in terms of equity: “The goal of updating property values is simple: Fairness. Accuracy. Better public services.”

It assured the public that safeguards are being planned to ensure a smooth transition.

“The city government remains committed to protecting taxpayers, supporting businesses, and ensuring sustainable and equitable development,” it added.

The push for a lower RPT adjustment comes amid warnings of a looming “tax cliff” in 2029, when the law’s one-year cap expires.

A policy paper from the Iloilo-based Institute of Contemporary Economics (ICE) found that a homeowner in Don Francisco Village in Jaro currently pays PHP 5,633.64 in annual RPT. Under the proposed citywide revaluation, that bill would rise 6 percent to PHP 5,971.66 in 2028 — but jump to PHP 10,139.40 in 2029, a sudden 69.8 percent spike with no phase-in mechanism built into the law.

The study traced the shock to the proposed 2028 SMV, which would significantly raise base land values. In its case study, a residential subdivision lot’s assessed value rises from PHP 6,500 to PHP 7,500 per square meter.

ICE warned that the 6 percent cap automatically expires after 2028. Without a local ordinance to cushion the transition, property owners in 2029 would absorb the full recalculated tax in a single year.

The timing compounds existing economic pressure. ICE noted that local businesses are already being squeezed by the 300 percent property tax hike that took effect in 2024, a PHP 550 daily minimum wage that ranks among the highest in the country, and rising energy costs that ICE estimates add the equivalent of a 4 to 7 percent invisible wage increase per worker.

Iloilo City’s economic growth has already slowed from 10.4 percent in 2023 to 7.1 percent in 2024 under these conditions. ICE has further downgraded its outlook to a constrained 4.5 to 5.0 percent.

The city’s temporary 40 percent property tax relief discount is also set to expire before the 2028 revaluation takes effect.

ICE is urging the City Assessor to submit a Revenue and Tax Impact Report within 30 days of the new SMV’s approval, presenting at least three options for lowering assessment levels or tax rates to prevent excessive taxation.

For the City Council, ICE outlined several tools to soften the blow: extending the RPT cap beyond 2028 through a local ordinance, reducing the base tax rate, spreading excess charges over several years, or waiving them entirely.

Rather than blanket discounts, ICE recommends a targeted approach — giving commercial landlords a 20 to 30 percent tax credit if they agree to limit rent increases for small business tenants to no more than 5 to 7 percent per year.

The paper also proposes a city-funded utilities subsidy for energy-burdened small businesses, conditioned on retaining at least 90 percent of their workforce.

Under RA 12001, final authority to approve new property values rests with the Secretary of Finance, while the City Council’s role shifts to managing the tax impact through local legislation.