PHASED, NOT HASTY: Ex-finance chief: 300% RPT hike justified, but rollout must be gradual

By Rjay Zuriaga Castor

Former Finance Secretary Jesus Estanislao described Iloilo City’s 300 percent real property tax (RPT) increase as justified but recommended a gradual rollout to avoid burdening taxpayers.

Estanislao said the RPT adjustment is reasonable and long overdue, noting that the rates have remained unchanged for 18 years.

However, he warned that implementing the full increase in a single year may overwhelm property owners.

“It’s not unreasonable [the increase],” Estanislao said during a chance interview on Aug. 28.

“The way it is implemented, I would structure it so that instead of 300 percent all in one year, you can make it over a period of five or seven years, which makes it reasonable,” he added.

Iloilo City began implementing the RPT increase in 2024, marking the first adjustment in nearly two decades.

The median increase was 300 percent, though some property owners experienced hikes as high as 6,000 percent.

The Commission on Audit (COA), in its March 2023 audit observation, flagged the city’s failure to revise fair market values (FMV), which resulted in lower RPT revenue and lost opportunities.

COA directed the City Assessor to update the FMV and submit a recommendation for review and enactment to raise locally generated revenue.

Councilor Rex Sarabia said the increase was driven by three key factors: the city’s growing economy, the devolved responsibilities under the Mandanas ruling, and the legal mandate to revise property valuations.

Public backlash led the city to approve a 40 percent discount on RPT payments as a relief measure.

Initially set to expire in 2026, the discount is now being considered for extension until 2028.

Councilor Sheen Marie Mabilog proposed an 80 percent RPT reduction, but her measure did not gain traction among her colleagues.

Estanislao emphasized that public trust in tax increases depends on transparency and accountability in government spending.

“If the city government is not doing anything and simply diverting all of that money to non-public purposes, I will oppose it very strongly,” he said.

“But if the city government is increasing taxes and using all of that money to construct the public schools that Iloilo needs, I think it’s for the entire community to decide—and we go along because it’s for the good of Iloilo City,” he added.

He said taxpayers are more likely to accept tax increases when they see visible investments in education, health, and public works.

He also clarified that tax hikes have limited impact on inflation, which is driven by broader regional and national factors.

What matters, he said, is whether increased collections result in tangible improvements in residents’ lives.

For 2025, Iloilo City has an approved budget of PHP 4.215 billion to support programs under its RISE framework—Responsive Governance, Investment in People, Sustainable Growth, and Excellence.

Key revenue sources include a projected 14.83 percent rise in RPT collections to PHP 1.056 billion and a PHP 261.57 million increase in the National Tax Allotment, bringing it to PHP 1.71 billion.

For comparison, the city’s 2024 budget was PHP 3.6 billion, a 21.88 percent increase from the PHP 2.96 billion allocated in 2023.

That budget was funded through PHP 1.86 billion in tax revenue, PHP 1.455 billion from the National Tax Allotment, PHP 238.88 million in non-tax income, and PHP 45 million from the city’s 2 percent share in the economic zone.

After the RPT increase took effect in 2024, the Bureau of Local Government Finance reported that Iloilo City collected PHP 1.67 billion in RPT, the highest in four years.

RPT collections in previous years were PHP 1.13 billion in 2020, PHP 1.14 billion in 2021, PHP 1.15 billion in 2022, and PHP 1.17 billion in 2023.

The RPT’s share of the city’s income rose to 34.9 percent in 2024, up from 30 percent in 2023 and 29.2 percent in 2022.

Estanislao visited Iloilo City on Aug. 28 as one of the speakers at the Management Association of the Philippines General Assembly.

He served as Socioeconomic Planning Secretary and director-general of the National Economic and Development Authority from 1989 to 1990.

He was later appointed Secretary of Finance from 1990 to 1992 under President Corazon Aquino and played a key role in economic reforms following the People Power Revolution.

After public service, Estanislao became a leading advocate for governance reforms and founded the Institute of Corporate Directors and the Institute for Solidarity in Asia.