‘TAX CLIFF’: Iloilo City property owners face 2029 tax shock

By Francis Allan L. Angelo

A homeowner in Don Francisco Village in Jaro, Iloilo City currently pays PHP 5,633.64 in annual real property tax.

In 2028, under a proposed citywide revaluation, that bill would nudge up by 6% to PHP 5,971.66. But one year later, that same homeowner would owe PHP 10,139.40 — a sudden 69.8% spike with no phase-in and no warning built into the law.

That is the central finding of a new policy paper from the Iloilo-based Institute of Contemporary Economics, which analyzed how the city’s proposed 2028 Schedule of Market Values would hit individual taxpayers once a one-year legal shield expires.

The proposed SMV — the official price list the city uses to calculate how much a property is worth for tax purposes — would raise base land values significantly.

In the case study, a residential subdivision lot’s assessed value jumps from PHP 6,500 to PHP 7,500 per square meter.

But property owners would not feel the full weight immediately. Republic Act No. 12001, the national law mandating the revaluation, caps any tax increase during the first year at 6% of the previous year’s bill.

The problem, ICE warns, is what happens the year after.

That 6% cap automatically expires after 2028. Without a local ordinance to cushion the transition, property owners in 2029 would absorb the full recalculated tax in one shot. The institute calls this the “tax cliff.”

The timing could not be worse. The paper notes that local businesses are already being squeezed from three directions at once: the 300% property tax hike that took effect in 2024, the 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% invisible wage increase per worker.

The city’s economic growth has already slowed from 10.4% in 2023 to 7.1% in 2024 under these pressures. ICE has further downgraded the outlook to a constrained 4.5% to 5.0%.

For small businesses operating on thin margins, the combined effect means fewer hires, shorter work hours, and more contract non-renewals, according to the study.

Making the squeeze tighter, the city’s temporary 40% property tax relief discount is set to expire before the 2028 revaluation even kicks in.

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 lays out several tools to soften the blow: extending the cap beyond 2028 through a local ordinance, reducing the base tax rate, spreading the excess charges over several years instead of collecting them all at once, or waiving the excess entirely.

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

The paper also proposes a city-funded utilities subsidy for energy-burdened small businesses, on the condition that they keep at least 90% of their workers employed.

Public consultations on the proposed 2028 SMV were held on March 30 and 31, 2026.

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

Property taxes in Iloilo City may look manageable in 2028, but a new policy paper is warning that the real shock could come a year later.