P650M in new real property tax
By ROGER M. BALANZA
The Davao City Council yesterday approved an ordinance amending Fair Market Values for real property in a move that could generate an estimated P650 million in additional annual revenues for the city coffers.
In another development, the city council meeting in special session yesterday, also approved the 2008 Annual Budget amounting to P2.7 billion.
Councilor Bonifacio Militar, author of the ordinance, said despite the raise in assessment levels for Fair Market Values, the city would not lose its attraction as a vital investment area in the Davao Region. The city government last assessed Fair Market Values in 1994. “The new assessements are lower than those imposed in new tax measures by neighboring cities,” he said.
Militar, the council floor leader and chair of the committee on rules, laws and ordinances, said the ordinance had been subjected to committee hearings attended by real property owners and the business community before being finalized by his committee, the City Assessor and the City Treasurer.
The additional revenue of P650 million from the new Fair Market Values assessments was projected by the Assessor and Treasrer, said Militar, who also authored last year the ordinance amending the ten-year old City Revenue Code.
The increase in real property tax—one of the city’s biggest tax generators—is only minimal, said Militar, also author of the Garbage Tax embedded in the 2006 Amended City Revenue Code and first implemented this year. The new Fair Market Values would take effect next year.
Bigger local tax
Militar said 2008 may see a reversal in the ratio between locally generated tax (48 %) and the Internal Revenue Allotment (IRA), the city government’s share from national taxes collected by the Bureau of Internal Revenue (BIR), with the new Fair Market Values used as basis in real property taxes.
Earlier, City Administrator Wendel Avisado said new tax measures backed by a computerized tax collection system would push annual revenues to higher levels next year.
Militar said the new Fair Market Values would address low assessments that slept in limbo since 1994, despite skyrocketing market values owing to the city’s economic boom.
Tax collection at mid-year netted P2 billion, leading to rosy speculations annual revenues for 2007 could breach the P4 billion mark. Last year’s colllection hovered at the P3.7 billion mark.
Tagged as one of few Billionaire Cities in the country by the Bureau of Internal Revenue, the tax haul consisted of P1.2 billion in Internal Revenue Allocation (IRA) or nearly half of the mid-year tax bonanza.
If the targeted tax figure is realized by year-end, 2007 would be a landmark in the tax collection efforts with the local government breaching for the first time the P4 million ceiling.
Local business had credited Mayor Rodrigo Duterte’s peace and order campaign and tax incentives to inflows of new investors for the largest contribution ever by Business Tax, which accounted for P414 million or about a fourth of the mid-year tax haul.
ouyed up by the surge in revenues, City Hall has programmed P3.6 billion worth of infrastructure projects to be implemented from 2008 to 2010.
We can afford to embark on this ambitious building program with annual revenues zooming up, said councilor Myrna Dalodo-Ortiz, the chair of the Davao City Council committee on finance, who proposed the infrastructure building binge under the Local Development Investment Plan (LDIP) for 2008-2010, approved by the City Council two weeks ago.
The LDIP earmarks P2.6 billion for infrastructure projects and P1 billion in non-infra projects.
The infrastructure fund would go to road building (P1.3 billion), buildings (P645 million), drainage projects (P252 million), electrification (P93 million), bridges (P130 million) and water system (P199 million).
Programs for economic development would get P189 million, social development P588 million and development administration at P262 million would share the P1 billion non-infra fund.