Property Valuation Reform to Boost Local Tax Revenue Significantly from 2030

The Real Property Valuation and Assessment Reform Act (RPVARA) is expected to raise local government revenue by “significant” amounts starting 2030 once the revised valuations kick in, the Department of Finance (DoF) said. “Come succeeding revisions, that’s the time (we will feel it). Especially after the election in 2028. By 2030 onwards, you will see the impact of the RPVARA when it comes to LGU (local government unit) revenue,” Bureau of Local Government Finance (BLGF) Executive Director Consolacion Q. Agcaoili told reporters on the sidelines of an event on Thursday. The DoF will also be assisting LGUs throughout the transition process to expedite the release of updated property valuations and allow them to use updated valuation tables as soon as possible. “There is funding support through the Real Property Tax Administration Fund. Implementation will be supported through local resources and national allocations with additional assistance for lower-income LGUs. This is to make sure that no LGU is left behind,” Finance Secretary Frederick D. Go said in a speech at the same event. He added that municipalities can use the RPVARA to make property valuation transparent, consistent, and market-based, which will lower the cost of doing business and boost investor confidence. “We are now in full implementation. This is our opportunity to raise the standard of local governance across the Philippines. This reform strengthens local governance without weakening local autonomy. We urge each of you today to see RPVARA as a strategic investment in the future of your localities. Lead this reform. Implement it with urgency,” Mr. Go said. “With steady implementation at the LGU level, this reform will deliver what it was designed to achieve. A valuation system that works better for taxpayers is more predictable for businesses and supports long-term development.” Ms. Agcaoili said real property taxes for most areas are expected to rise due to the reform. Ms. Agcaoili said that the 6% interest rate cap in place until 2028 will also cushion the impact on real property owners. “The 6% cap is good only until 2028. Meaning, it only applies to the 2028 collection of real property taxes. This one is self-executory in the sense that there is no need for an ordinance to implement this. But come 2029, they can start adopting their ordinances.” Market value schedules are also subject for updating every three years under the RPVARA, she added. “I would like also to note that when we do valuation for tax purposes, we use the mass appraisal approach, meaning it is not individually valuing the property. We are valuing the property as a mass or as a group, depending on the common development and situation,” she said, noting that the valuations will serve as a benchmark “for other purposes like expropriation.” Fairer valuations are also expected to expedite government infrastructures progress “because it will reduce, if not eliminate, valuation (disputes),” she said. The DoF has said it expects the RPVARA to adjust property appraisal practices, set valuation standards, and improve cooperation between national and local governments. The reform gives LGUs continued authority to set tax rates and assessment levels, while valuation standards will be strengthened with BLGF oversight. Information Source: BusinessWorld Economy