TO IMPROVE LOCAL GOV’T FINANCE: DOF pushes reforms in real property valuation, other bills

The Department of Finance (DOF) presented to the Senate key legislative reforms to modernize real property valuation and improve local government finance.

“The [Medium-Term Fiscal Framework] proposes measures that will improve tax administration, enhance the fairness and efficiency of our tax system, and promote environmental sustainability to address climate change. These reforms include specific measures that will help local government units attain fiscal sustainability,” said Finance Secretary Benjamin Diokno during an organizational briefing before the Senate Committee on Local Government.

Secretary Diokno said that the Real Property Valuation and Assessment Reform is a priority bill of President Ferdinand “Bongbong” Marcos, Jr. The bill aims to promote the development of a just, equitable, and efficient real property valuation system.

“The reform will broaden the tax base used for property and property-related taxes of the national and local governments, thereby increasing government revenues without raising the existing tax rates or devising new tax impositions. The bill’s urgent enactment will assist the LGUs in optimizing revenue collections, which in turn, will promote genuine local autonomy,” Secretary Diokno explained.

Bureau of Local Government Finance (BLGF) OIC – Executive Director Ma. Pamela Quizon added that the reform will depoliticize the valuation system, and enable regular updating and creation of a comprehensive electronic database.

The DOF also seeks to institutionalize the income classification of local government units (LGUs) by increasing the thresholds for the income classification of all provinces, cities, and municipalities.

“[The proposed reform on LGU Income Classification] will authorize the Secretary of Finance to set the income ranges and undertake the regular income reclassification of all provinces, cities, and municipalities once every three fiscal years, starting within six months from the effectivity of the bill,” Secretary Diokno explained.

The current income classification has been set in 2008 and is therefore severely outdated, according to Executive Director Quizon.

DOF also proposes to widen the scope of LGUs’ property insurance coverage to include other events, to protect the government against significant losses of scarce resources through an LGU Property Insurance bill.

Executive Director Quizon said that the proposed measure will increase insurance coverage and mandate provinces to insure government properties at the local level.

The Department is likewise pushing for the passage of bills amending Republic Act (RA) 7160, otherwise known as the Local Government Code of 1991.

“These amendments include simplifying the rate structure of local business tax; revisiting the situs provision; assigning more revenue-productive taxes to LGUs; and providing a mechanism for administrative recourse in case of dispute related to LGU taxing power, among others,” Secretary Diokno elaborated.

Senate Committee on Local Government Chairperson Joseph Victor “JV” Ejercito, who was also a former local chief executive, assured Secretary Diokno of the Committee’s support for the bills for local government finance.

The senator said he will be filing all the measures proposed by the DOF.

“We look forward to partnering with the Committee and its honorable members to push forward measures that will boost our LGUs’ revenue generation capacities for them to be truly fiscally resilient and sustainable,” said Secretary Diokno.