Paying Taxes: A taxing task

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By Roberto P. Alabado III

Planning Perspectives

Wednesday, February 19, 2014

BACK in my university days, during enrollment period we always were reminded of what UP really stands for -- University of Pila. The long stretch of human lines just to enroll in your desired time slot for a subject would really test your patience. I remember going to the enlistment room at 6 AM just to be first in line. Nowadays my niece, Kamila could just enlist via internet and may just have to fall in line for payment. This line will eventually disappear once payment transactions can be made via government banks, ATMs or even credit cards.

If universities can eliminate the long lines then why can’t the LGUS, NBI and NSO do the same thing? I know that they have started to deal with the situation but why only now? Still it is better late than never as they always say.

Seeing at the long lines in many LGUs in the region just to pay for business permits really makes me wonder what the LGUs are doing to eliminate these lines.


Our LGUs must ensure that its citizens pay their taxes not just diligently but also conveniently. I salute our business taxpayers for patiently waiting just to give their contribution for the development of their city or municipality but are the LGUs making it more comfy for their citizens while waiting for their turns? Someone told me that a few cities in Luzon even offer free brewed coffee and water for its taxpayers inside their air-conditioned lobbies and comfortable seats. How about having TVs in the waiting lounges to eliminate boredom? Do not bother showing those telenovelas or TV shows, maybe infomercials on the projects and activities of the LGU and of the national government agencies can be shown to inform people where their taxes are going.

The Department of Trade and industry XI will soon be releasing a survey on the taxpayers’ perception on the Business Processing and Licensing Systems of several cities and municipalities within the region. I hope that LGUs will be guided by the results to improve their BPLS systems in the next cycle of business tax payments.

Recently, Davao City Vice Mayor Paolo Z. Duterte informed us that more than a billion pesos of taxes remain uncollected. Is it a failure to pay or a failure to collect? That is the question.

The lifeblood of the city to further its development will always be taxes especially real property taxes. A quick look at our real property tax system will show that the valuation of land being used by the local government is already outdated and outmoded.

This means that the declared values of the land on which property taxes are based are very low compared to its current market prices. It still has not upgraded its system to incorporate Geographic information System (GIS) to locate and evaluate properties much faster.

In the Philippines, property owners brag that they have three sets of valuation of their lands – BIR, Local Assessors and the Real Estate Brokers. If taxes are to be paid to the local government, they undervalue their property value declaration in the local assessor's documents so they will pay minimal taxes (the local assessor’s office rarely checks the validity of the declaration). The BIR's valuation, which is much higher than the local assessor's valuation, is when they have to pay for estate taxes but of course the highest value will be real estate brokers’ selling prices.

Which among the three is closest to the real market value of the land? It may lie between the BIR valuation and the selling price of the real estate broker.

Many property owners complain when the valuation of their properties are high but these valuations if properly done only reflect the market conditions of the area and are not subject to the whims of the assessing officials. Put the blame on the sellers and buyers and not on the valuation officers.

What are the implications of such system? Taxpayers are not paying the right taxes that are due them. The local government unit cannot raise enough funds to sustain the development of the city. The quality and access to education remains low because a certain percentage of the real property taxes go to the Special Education Fund used to build classrooms and improve the local education system.

The city has always been delivering quality services to its citizens – building more roads and drainage systems to minimize traffic and flooding, ensuring the public safety of its citizens by installing various security and traffic monitoring systems, providing health and social welfare systems to the vulnerable sectors of its society among others.

These factors have always been cited by various investors as crucial in their decision to set up their businesses in the city. Our people are enjoying a better quality of life since investors have built new commercial spaces, resorts, housing projects and offices that translate to better services, business and employment opportunities for our citizens.

If the city has been taking care of its citizens so that our people can have enjoy a better quality of life then I guess it is also proper that citizens also ensure its sustained development efforts by paying the proper property taxes to the city. More taxes paid will translate to more infrastructure and economic support projects that will make the city more attractive for investment which will provide better services, business and employment opportunities for taxpayers which will also make land prices rise for the benefit of landowners then the cycle begins again.

You see it is a win-win situation between the city and the taxpayers especially if both the city officials and employees and the taxpayers can resist the temptation of dealing with the “grey areas” of tax payments. I believe that the city has shown its political will to stamp out corruption within its ranks so citizens should have the courage to report any anomalies in the tax collection system. I just also hope that our tax collectors are honorable and honest enough to resist the bribe money to undervalue the properties of the taxpayers.

It is when there are different valuation systems when confusion and corruption arise – there must be only one valuation system where everyone will base property values. The national government can spearhead the valuation system but at the same time ensure that the local government valuation will not be lower than 90 percent of valuation set by the national government. This will guide both buyers and sellers of land so that negotiations can be done fairly.

We simple citizens must always remember that we will always deserve not only who we elect into office but also the taxes we pay.

Published in the Sun.Star Davao newspaper on February 20, 2014.


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