Volume X Analysis of the Revenue Performance ! on Real Properties, CYs 2001 - 2005 1. INTRODUCTION This study was conducted in connection with the Land Administration and wement Project (LAMP), now on its second phase. The LAMP is a long-term ration system to Mar commitment of the Government to introduce reforms in the land adminis enable land resources to contribute more meaningfully to the socio-economic development goals of the country. This will serve as an input to the Tax Policy Review which is one of the major activities under the Valuation and Taxation Component of LAMP 2. The proposed yvemnment revenue, thus reforms reforms in the valuation system would impact on the local n this area are also in order Presently, local taxes on real property include the basic real property tax (RPT), special education fund (SEF) tax, special levy, transfer tax and the idle land tax. The role of property {axes as a major revenue source owes to the fact that land which is the primary object of property taxation is permanent and a stable revenue source among local Prepared by Ms. Ri Tax Specialist and Ms, Teresita L. Solomon, Supervising Tax Specialist of the Local Fin 1 L. Caro, Tax Specialist Il, reviewed by Ms, Evangeline D. Valmores, Ch ace Branch, NTRC [inal ofthe Revenue Performance of Local Tes on Real Properties, CTSNIRC Tax Research Journal Volume XIX government units (LGUs). LGUs in the country consist of 79 provinces, 117 cities, 1,506 municipalities and 41,993 barangays’. Several studies’ in local finance indicate that property taxes have been encumbered with administrative and structural problems which deter the achievement of their full potential as an important revenue source of LGUs. Thus, more than a decade after the enactment of the Local Government Code (LGC), an assessment on the revenue performance of property taxes is deemed necessary. This study reviews the revenue performance of taxes on real property imposed by LGUs from 2001 up to 2005. It looks into the productivity of the revenue sources of LGUs over the last five years as they strive to become self-reliant and financially stable communities The primary data used in the study were obtained from the Annual Reports on Local Governments prepared by the Commission on Audit (COA), Summary Report on RPT and Taxable Assessed Value of the BLGF and the National Accounts of the Philippines of the ‘National Statistical Coordination Board (NSCB). I. BACKGROUND INFORMATION Property related taxes are imposed on all forms of real property such as land, buildings, improvements and machinery. However, real properties owned by government, charitable institutions, churches, cooperatives, and those that are used in the supply and generation of water and electric power as well as equipment for pollution control and environmental protection are exempted. ‘The property related taxes are as follows: 1, Basie Real Property Tax (RPT) ~ This is levied by provinces, cities and municipalities within Metro Manila’ on owners of land, building, machinery and other improvements.’ It is based on the assessed value of the property, which is derived upon the application of the assessment levels (in percentage) to the fair market value of the property. " Latest data is as of September, 2006, www.nseb.gov.ph. 2 mong which are: NTRC, A Survey on the Taxing and Other Revenue-Raising Powers of Local Governments, (Philippines, 1997) pp. 121-128; NTRC, Real Property Tax Gap: An Update, NTRC Tax Journal, vol XVILI, January-February 2006; and LAMP, Land Valuation Policy Study, 2002. As of 2007, municipalities within Metro Manila are Navotas, Pateros and San Juan, * Section 232 of the Local Government Code (LGC). * Section 198 (g) and (h), Ibi. z Analysis of the Revenue Performance of Local Taxes on Real Properties, CYs 2001-2003)[ NTRC Tax Research Journal a — Volume XIX. } ‘The assessment levels for land are differentiated depending on their actual use. Commercial, industrial, and mineral lands are assessed at the highest rate of 50%, agricultural lands at 40%, and residential and timberlands at the lowest rate of 20%." For buildings and other improvements, the asscssment levels are graduated i.e., they increase directly with the fair market values, from zero percent for residential buildings worth P175,000 and less to 80% for commercial and industrial properties worth over P10,000,000. Machineries are likewise assessed in relation to their actual use. The lowest level is assigned to machineries used for agricultural purposes at 40%, and the highest level to commercial and industrial machineries at 80%, Machineries used for residential purposes are subject to an assessment level of 50%." ‘The assessment levels and tax rates vary among different LGUs as enacted through an ordinance passed by the local councils but subject to the ceilings prescribed in the LGC. The tax due is computed by applying the basic RPT rates of not exceeding one percent (1%) in the case of provinces and two percent (2%) for cities and municipalities within Metro Manila to the assessed value of the property.” ‘The proceeds derived by a province, city or municipality within Metro Manila from the basic RPT are distributed as follows:"" (a) In the case of provinces: Province | 35% accrues to the general fund of the province. Municipality |40% accrues to the general fund of the| | municipality where the property is located. Barangay | 25% accrues to the barangay where the property is located © Section 218 (a), Toid Section 218 (b). Ibid. * Section 218 (c ), Ibid sion 233, [bid " Section 271, Toid Analysis of the Revenue Performance of Local Taxes on Real Properties, C¥s 2001-2005[RTRC Tax Research Touma Vohune SIRT] (b) In the case of cities: City 70% accrues to the general fund of the city. Barangay | 30% is distributed among the component barangays where the property is located in the following manner: (30% accrues to the barangay where the property is located; and (ii) 30% “accrues equally to all component | barangays of the city (c) In the case of municipalities within Metro Manila: Metropolitan | 35% accrues to the general fund of the Authority. Manila Authority ‘Municipality [35% accrues to the general fund of the municipality. Barangay | 30% is distributed among the component barangays of the municipality where the property is located in the following manner: (50% accrues to the barangay where the property | is located; and | (ii) 50% acerues equally to all component barangays of the municipality. 2. Special Education Fund (SEF) Tax ~ This is an annual tax imposed by the province or city, or a municipality within Metro Manila at one percent (1%) of the assessed value of real property, which is in addition to the basic RPT.'' The proceeds exclusively accrue to the local schoo! boards. However, in the case of the province, the proceeds are divided equally between the provincial and municipal boards. '? 3. Idle Land Tax- This is levied by the province or city, or a municipality within Metro Manila as an annual tax on idle lands at a rate of not exceeding five percent * Section 235, Ibid " Section 272, Ibid a _ Analysis of the Revenue Performance of Local Taxes on Real Properties, C¥s 2001-2005)NHRC Tax Research Jounal Volume XDI] (5%) of the assessed value of the property.’ This is also in addition to the basic RPT. The proceeds solely accrue to the respective general funds of the province or city where the land is located. In the case of a municipality within Metro Manila, the proceeds accrue equally to the Metropolitan Manila Authority and the municipality where the land is located."* 4. Special Levy - This is imposed by the province, city or municipality on lands specially benefited by public works projects or improvements funded by the LGU concerned. The levy should correspond only to a part not exceeding 60% of the aetual cost of such projects and improvements, including the cost of acquiring land and other real properties. However, the special levy shall not apply to lands exempt from basic RPT and the remainder of the land portions of which have been donated to the LGU concemed for the construction of such projects or improvements. '* The proceeds of the special levy benefited by public works accrue to the general fund of the LGU which financed such public works, projects or other improvements, 5. Tax on the Transfer of Real Property Ownership'’- This is imposed by a province or city on the sale, donation, barter, or any other mode of transferring ownership or title of real property at the rate not exceeding 50% of one percent of the total consideration involved in the acquisition of the property or of the fair market value in case the monetary consideration involved in the transfer is not substantial, whichever is higher. The proceeds of the tax accrue entirely to the general fund of the province or city concerned. Tl. ANALYSIS OF THE REVENUE PERFORMANCE OF LOCAL TAXES REAL PROPERTY ‘A. Revenue Performance of Property Taxes, By Source (Tables A, A.1 and A.2 ) 1. From 2001 to 2005, revenues from property taxes consisting of the basic RPT, SEF tax, special assessment, transfer tax and idle land tax represented on an annual average, 12.94% of the total local government revenues from all sources. On an annual basis, aggregate revenues of said taxes consistently increased from 816,000 million in 2001 to 219,240 million in 2002 and to 222,844 million in 2003. In 2004, total property tax revenue dropped to B22,659 million or by 0.81%, mainly on account of the shortfall in basic RPT revenues which declined by 5.23% for the same period. Sectian 236 Ibid. " Section 273, Ibid ® Section 240, Ibid. " Section 135, Ibid Tniyais of the Revenwe Performance of Local Taxes on Real Properties, C¥s 2001-2005 3[NTR Tax Research Jounal In 2005, the combined taxes on real property regained their momentum as they increased by 14.81%. On the average, property taxes grew modestly at 12.08% during, the period, slightly higher than the average growth rate of the Gross Domestic Product (GDP) at 10.53%.'? This means that property tax revenue was able to keep pace with the changes in national income. Fig. 1. PROPERTY TAX REVENUES OF LOCAL GOVERNM CYs 2001-2008 30,000 25,000 15,000 10,000 000 o Source of Basie Data: Local Government Audit Office Annual Report, COA. Comparatively, the average annual revenues from property taxes grew slightly faster than business taxes (11.57%), other taxes (3.24%) and non-tax revenue sources (10.65%). In spite of the substantial increments in locally generated revenues, LGUs continued to rely heavily on extemally-generated revenues comprising mainly of the intemal revenue allotment (IRA), share from the utilization of national wealth, grants, and aids, borrowings and others, as they contributed 67.24% to total local revenues. Specifically, the IRA accounted for the biggest share at 64.97% of the total. This only shows the heavy dependency of LGUs on external sources for their funding needs 2, Among the property taxes, the basic RPT (47.68%) and the SEF tax (46.72%) were the chief revenue sources accounting for a combined share of 94.40% of the total property tax revenues. The transfer tax contributed 5.33%, while the special assessment and the idle land tax made meager contributions of only 0.21% and 0.06% respectively, to the total. ‘National Accounts of the Philippines for CYs 2001 to 2005, NSCB. “Tialyss of he Revere Performance of Local Taxes on Real Properties, C¥s 2001-7003][NRC Tax Research Journal - Volume XIX1 Table 1. AVERAGE PROPERTY TAX REVENUES OF LOCAL GOVERNMENT UNITS, BY SOURCE, CY 2001-2005 (Amount in Million Pesos) Average Distribution | Growth Source 2001_| 2002 | 203 | 200s | 200s | amount |) | Rate 1. Property Taxes assoo | 1.240 | 2244 | 22650 | 2507 | 2usss joooo | 1208 | 1.1 Real Propeny Taxes _| 15,654 | 18,059 | 21,667 | 21.453 | 24452 | _ 20261 sas | 1209 a. Basic x29 |_9274 | i240 10656 | 12235 | 10.236 47.68 b. SEP 98s |_s.7e4 | 1042 | 10,796 | 12217 | _ 10,025 son | 1.2 Transfer Tax sre] iss] tos | i169 | aio | tat 533 | 1.3 special Assessments vol | a] sl os as] oz 1210 12 Idle Land Tax 28 1 3 a] 2 06 | 16323 Souree of Basic Data: Local Goverament Audit Office Annual Report The average annual revenue for all property taxes increased during the period, of which the idle land tax registered the highest rate of increase at 163.23%. The idle land tax, however, has not been a significant source of local revenues with its average contribution to total property tax revenues at less than one percent only. Other property tax revenues grew at almost the same rate at 13.45% for transfer tax, 12.55% for basic RPT, 12.10% for special assessment and 11.71% for SEF. B. Performance of Each Property Tax 1, Basic Real Property Tax (Tables A, A.1 and A.2) ‘The basic RPT is one of the major sources of LGU revenues, increasing from 27,769 million in 2001 to 812,235 million in 2005, or by 12.55% annually. During the five-year period, the tax contributed an average of 210,236 million per ‘annum, or 6.17 % of the total LGU revenue. In spite of the noted inerease in basic RPT revenues, the tax is considered underutilized as its overall collection efficiency was posted at only 55%'* for the same period, which means that about 45% of the basic RPT collectibles have remained uncollected. A recent NIRC study!” notes a number of problems contributory to the underperformance of the tax, such as: (a) poverty of taxpayers; (b) political influence; (¢) financial dislocation due to natural calamities; (d) limited use of civil remedies; and * See Table E. “NTRC, Real Property Tax Gap: An Update, NTRC Tax Journal, Volume XVILL January-February 2006, p. 20. Analysis of the Revenue Performance of Local Taxes on Real Properties, C¥s 2001-2005[NRC Tax Research Foural Volume XIX] (e) undervaluation of property values. Moreover, the same study points out that the dominance of the IRA in the revenues of local govemments provides a disincentive for LGUs to exert more effort in collecting the RPT. This undermines the generation of sufficient revenues needed for a more sustainable economic development for the LGUs. In terms of growth, the highest rate was recorded in 2003 at 21.24%. However, it declined by 5.23% in 2004 or from 11,244 million in 2003 to 210,656 million, The contraction in basic RPT revenues is aftributable, among others, to the decline in the collection effort of some LGUs. The collection efficiency of provinces decreased from 60% in 2003 to 56% in 2004 in contrast to those of cities and municipalities within Metro Manila which posted an increase in their collection effort.” The slowdown in the collection effort was further aggravated by political and security uncertainties resulting from the conduct of the national and local election at that time. Incumbent local officials may have been less inclined to enforce legal remedies in the collection of delinquent RPT in anticipation of negative political repercussions like losing the support of their constituents. In 2005, an improvement was noted as the overall collection efficiency increased to 61% from 58% in 2004."! 2. Special Education Fund Tax (Tables A, A.1 and A.2) ‘The SEF tax is an additional imposition on the basic real property tax. It accrues entirely to the local schoo! boards in support of the primary and secondary education of the concemed LGU. The proceeds are earmarked for the operation and maintenance of public schools, construction and repair of school buildings, facilities and equipment, educational researches, purchase of books, periodicals and sports development. The SEF tax which accounted for about 6.05% of the total LGU revenues increased from B7,885 million to 212,217 million in 2005. The tax grew faster in 2003 at 18.88% from the 11.40% growth the previous year. The growth slowed down to 3.38% in 2004, until it bounced back to a double digit growth of 13.16% in 2005 Although the SEF tax is collected simultaneously with the basic RPT, a variation in their actual revenues has been noted throughout the period. This may be attributed among others, to their differentiated tax rates, i.e. SEF tax is imposed ata fixed rate of 1% on the assessed value of real property while the basic RPT is imposed at not exceeding 2% on the assessed value of real property for cities and municipalities within Metro Manila and not exceeding 1% for provinces. See Table E. * id. z “pats os Rove Peformance of oval Taxes oh Real Proper C¥s 2007-2003](NiRCTox ReearchJowmt erie TT] 3. Transfer Tax (Tables A, A.I and A.2) The transfer tax on real property is a provincial and city imposition, The tax is imposed on the sale, donation, barter or any mode of transferring ownership or title of real property at a maximum rate of % of 1% based on the total consideration involved in the acquisition of the property or its fair market value whichever is higher. The tax is imposed upon the seller, donor, transferor, executor or administrator and is similar (o the transfer taxes, i.¢. Capital Gains Tax (CGT) and Documentary Stamp Tax (DST), imposed by the national government Revenue from the tax on transfer of real property ownership increased from 2878 million in 2001 to B1, 419 million in 2005. During the five year period, the tax posted an erratic trend, increasing substantially at 29.31% in 2002 but dropping to a negative 2.74% the following year. From 2004 to 2005, the tax recovered from the negative growth as it increased by 5.81% and 21.42%, respectively. The tax on transfers contributed less than 1% to total local revenues, even if discretionary changes had been introduced under the LGC such as: increasing the maximum rate from % of 1% to % of 1% and changing the tax base from assessed value to market value or the total consideration, whichever is higher. The undervaluation of sales data to minimize the tax has contributed much to its low performance.” Studies” show that the cost of transferring properties in the Philippines is very high (almost 8%) compared to other countries (0. 5% to 4.5%), thus, taxpayers tend to underdeclare the value of property or worse, engage in informal transactions. 4. Special Levy (Tables A, A.1 and A.2) The special levy may be imposed on lands benefited by public works projects that are financed by the local govemment. The levy should not exceed 60% of the actual cost of the project and be apportioned among concemed landowners based on a formula to be established by the Local Legislative Council Proceeds from the special assessment exhibited an increasing trend from almost 240 million in 2001 to B53 million in 2005. However, its contribution to total local government revenues is very minimal at an average of 0.03%. The tax hhas not been a consistent source of LGU revenue as it is imposed only when a certain property is affected by an improvement or project funded by the local government. Moreover, despite improvements ot projects on lands funded by LGUs, some LGUs do not impose special assessment due to lack of familiarity and ‘expertise on the mechanism for its implementation. Others deem it irrelevant since government projects will anyway translate into higher market values of adjacent ttp/www1/worldbank/org.‘publiesector/decentralization/June2003Seminar/Philippines pa > LAMP, “Policy Studies Integration Report,” July, 2002, lysis ofthe Revenue Performance of Local Taxes on Real Properties, C¥s 2001-2005NIRC Tax Research Journal Volume XD properties, thus, resulting in higher realty tax due which could cover the cost of the public infrastructure.”* 5. Idle Land Tax (Tables A, A.I and A.2) The idle land tax is an additional levy on the assessed value of all lands classified as idle at the rate of not exceeding 5% per annum. The lands subject to tax are as follows: (a) Agricultural land with an area of more than one hectare, one-half of which remain uncultivated or unimproved by the owner of the property or person having legai interest therein. Agricultural lands planted to permanent or perennial crops with at least 50 trees to a hectare shall not be considered idle lands; (b) Non-agricultural lands, located in a city or municipality, more than 1,000 sq. meters in arca, one-half of which remain unutilized or unimproved; and (c) Unimproved residential lots in subdivisions. The rationale for the imposition of the ILT is to encourage urban and rural land development and increase the supply of land for productive use. Revenue generated from said tax declined from 228.34 million in 2001 to 1.04 million in 2002. In subsequent years, it increased gradually to 83.2 million in 2003, 83.7 million in 2004 and rising significantly to 223.9 million in 200S. Notably, the number of LGUs with reported collections from the idle land tax incteased from four in 2004 (Negros Oriental, Pasig City, Legazpi City and Digos City) to seven (Abra, Cavite, Palawan, Zamboanga Del Norte, Pasig City, Tacloban City, Digos City) in 2005.*° Although the idle land tax exhibited the highest average growth in revenue collections from 2001 to 2005 at 163.23%, its average contribution to total local government revenues was nil (0.01%). The number of LGUs imposing the tax may have been increasing annually but this still fell short of the potential number of LGUs which should have imposed the tax. ‘The non-imposition of the tax by some LGUs has been attributed among others to (a) lack of appropriate guidelines for its implementation; and (b) lack of a definite criterion on what is an “idle” land. * * Local Development Assistance Program Monitoring Team (LDAP), “Local Government Unit Revenue Mobilization Overall Study,” May 27, 1992, pp 65 and 66 % {Local Goverment Office Annual Report of COA for CYs 2004 and 2005. © These reasons were also mentioned in NTRC Surveys on Local Finance, viz: “Local Finance Survey”, 1975,1981, 1991 and 1997, 10 Analysis of the Revenue Performance of Local Taxes on Real Properties, CYs 2001-2003}NIRC Tax Research Journal Volume XIX, C. Revenue Performance of Property Taxes, By Level (Tables B, B.1, B.2, C, C1. C2, D, D.l and D.2) 2001-2005 snicipaiies Within and Outside Metro Manila, 1 ies, 08.6294 Provinces, |4 $0 Source of Basie Data: Local Government Audit Office Annual Report 1. Of the average revenues of B21.458 million from property taxes, cities accounted for the biggest share of 68.62%, while municipalities (within and outside Metro Manila) and provinces contributed 16.79% and 14.59%, respectively. The highest growth rate was registered by cities at an average of 12.85% annually. followed by provinces at 11.54% and municipalities at 10.12%. The proliferation of business and commercial establishments in the cities resulted in higher property values as well as tax yields The RPT (basic and SEF) is the biggest component of the property related 1 98,53% for municipalities, tax sources at 91.78% for provinces, 93.97% for cities a where basic RPT posted an average contribution of 38.58% for provinces, 90.07% for cities and 45.91% municipalities, and SEF tax at 53.21%. 43.89% and 52.62%. respectively. As may be noted, collection from basie RPT goes to the general fund of the LGUs while proceeds from SEF tax accrue entirely to the Local Schoo! Board. 3. On the other hand, other property taxes comprising of transfer tax, special assessment and idle land tax, accounted for a miniscule share of 8.21% for provinces, 6.03% for cities and 1.47% for municipalities. The limited number of LGUs imposing these taxes significantly contributed to their low performance. Tnalvais of the Revenue Purjormance of Local Taxes on Real Properties, C¥s 2001-2008 uNIRC Tax Research Journal Volume XIX1 D. Revenue Performance of Property Taxes, By Region By region, the NCR remained as the biggest contributor to total property tax revenues, with an average share of 49.73% from 2003 to 2005. The concentration of most high-end properties in the NCR has contributed much to the substantial share of property tax revenues in the region. Regions IV and Ill came in next with average contribution of 20.21% and 7.45%, respectively, to total property tax collection. The rest of the regions contributed less than 5% cach of the total collection. The least contributor is the Autonomous Region in Muslim Mindanao (ARMM) with an average share of 0.05%. The low level of property tax collection in ARMM may be attributed to the peace and order problem in the area which deters the collection effort of LGUs in the region. ‘Table 4, AVERAGE PROPERTY TAX REVENUE COLLECTIONS, BY REGION, CY 2003-2008 (Amount in Million Pesos) Average Distribution | Growth Regions | 2003 2004 | 2008 | Amount ce), Rate (%) Tota |__22,844| 22,650 | 25,947 3.816 | 100.0% | __ 44.89% ner] 770] ii | 6] 11,93 49.73% 3.96% Region | __410. 443 676 510 2.12% | 30.28% ___ CAR v9] _ 166 202 182 orm | __7.24% Region I 184 197 460. 2e0 | 1.15% [Region | sor [1.63 | 2,202 1,785, 7.45% Regiontv| 4474] 4,796 | _5,s9| 4,810 | 20.21% Region V 26] 314 33) 308 10.47% Region VI 1020] 1.163 | _ 1,199 1,328 8.58% Region VIL 2 out | 1,021 | 951 5.39% Region VIIL 204 196 238. 213 8.17% Region IX 3 143 168 141 0.59% | 21.74%. Region X S74 515 373 554 2.3396 049% Region XL 516 536 556 536 2.26% Region XIL 4a 367 364 391 1.65% Region XII 156 225 169 1s) 0.77% RM | 13 12 9 20.05% | -13.08% | Sourve of Basie Daia: Local Government Audit Office Annual Report In terms of growth rate, Region II registered the highest among the regions, on the average by 70.54% from 2003 to 2005, followed by Region I at 30.28%, Region IX at 21.74% and Region Il at 19.54%, respectively. NCR, on the other hand, had a Analysis of the Revenue Performance of Local Taxes on Real Properties, C¥s 2001-2005 B( NTRC Tax Research Journal D. Revenue Performance of Property Taxes, By Region Volume XIX.) By region, the NCR remained as the biggest contributor to total property tax revenues, with an average share of 49.73% from 2003 to 2005. The concentration of most high-end properties in the NCR has contributed much to the substantial share of property tax revenues in the region, Regions IV and III came in next with average contribution of 20.21% and 7.45%, respectively, to total property tax collection. The rest of the regions contributed less than 5% each of the total collection. The least contributor is the Autonomous Region in Muslim Mindanao (ARMM) with an average share of 0.05%. The low level of property tax collection in ARMM may be attributed to the peace and order problem in the area which deters the collection effort of LGUs in the region. Table 4, AVERAGE PROPERTY TAX REVENUE COLLECTIONS, BY REGION, CY 2003-2005 (Amount Million Pesos) ‘Average Distribution | Growth Regions 2o03_| 2004 | 2005 | Amount 0 Rate) vot | gagta| _gaese | _2se7| _agie | __aoo.00r, | _ta wor [11770] i [i261 | 11,832 49.7306 396% Region 1 410 aa 676 510. 2.12% | 30.28% CAR 179 166; 202 182 0.77%. 7.24% Region th isa 197, 460 20 13% | Region in| 1,591 | 1,563 2.202 ss 745% Regonly | a4a7a| 4796 | 5,159 | 4,10 20.21 7.39%. Region V 276 | _ 314 337 309 130% | 10.47%. Region vi| 1,020 1163 | 1,199 1128 374%. 5.58%. Region VI 922 on] 1028 951 4.00% | 5.30% Region Vil| 208 196 238 213 0.89% 8.77% Region IX 113, 143; 168, 141 059% | 21.74% Region X S74 S15 573, 554 2.33% 049% Region XI 516 536 556 sa6| 2.26% [3.78% Region XI 441 367 368 391 1.65% | -.8.68% | Region XL 156 22s |__169 1s | __ 0.77% 9.79% _ARMM 13 12 9 12, 0.08% | 13.08% ‘Source of Basic Davai Local Government Audit Office Annual Report In terms of growth rate, Region II registered the highest among the regions, on the average by 70.54% from 2003 to 2005, followed by Region I at 30.28%, Region IX at 21.74% and Region II at 19.54%, respectively. NCR, on the other hand, had a ral of the Ravens Performance of Local Taxes on Real Properiles, Ys 3001-2005 7]NERC Tax Research Jour Votame SBT] lackluster performance with an annual increase of only 3.96% during the period. The lowest growth rate was posted by Region X at only 0.49%, Region XII and ARMM. did not perform well during the period as their collection dropped by 8.68% and 13.08%, respectively. IV. CONCLUSION AND RECOMMENDATIONS In general, property related taxes imposed by local governments experienced growth in collection during the five year period (2001-2005), of which the basic real property tax remains the major contributor to aggregate revenues. However, a further assessment of these taxes shows that its full potential as an important source of local government revenue has not been fully attained on account of the problems afflicting the administration and collection of these taxes, Making these taxes become more productive sources of local government revenues requires the recognition of such problems as well as the development of reform measures for their resolutions. LGUs on their part must have the political will to pursue such reforms, since mandates or legislative innovations can only be sustained with their support and cooperation. In this respect the following recommendations of the LAMP and previous NTRC studies are hereby reiterated: 1. Adopt a single valuation base for all taxes on real property and uniform valuation standards. These will eliminate the current duplication of efforts involved in applying different valuation methodologies at the national and local levels and ensure that a nationally consistent, equitable, and impartial valuation system for real property is put in place; and Minimize political influence in the valuation processes by removing from the LGUs the power to appoint local assessors and approve the schedule of market values In addition to the foregoing, the following are the other recommendations of the cited NTRC studies: 1. Organize a special assessment unit to attend to the implementation of the special levy in the local government level. Also, the BLGF-DOF should offer assistance in the preparation of feasibility studies on special assessments; train local officials in the levy of special assessments; render technical expertise and consultancy services on special assessment; and provide the corresponding guidelines in implementing the special levy; Restore the appointing power of the Secretary of Finance over local assessors; Analysis of the Revenue Performance of Local Taxes on Real Properties, C¥s 2001-2005)[RIRC Tax Research Journal Volume XIX ] 3. Professionalize the assessment function through stricter adherence to the requirements and qualifications for the position of assessor 4. Conduct additional trainings and seminars on the technical aspects of property appraisal which are essential to the improvement of assessment administration; 5. Enjoin the local chief executives to enforce the civil remedi matter of political will; which is largely @ 6. Consider the creation of a delinquent accounts section in the Treasurer's Office: 7. Establish a complete and accurate real property database in 1.G 8. Synchronize assessment records with the collection records of individual taxpayers. The collection can be more efficient if the assessments made by the assessor are updated and completed for easier identification by the treasurer of delinquent taxpayers; 9. The computer use in property tax administration should not be limited to data storage and mathematical computations. In many countries, assessors are using computers in the valuation process such as its application for mass appraisal. ‘The effect of computerization in property tax administration is potentially beneficial to LGUs if the system is intelligently conceived and carefully developed; 10. Invest in additional personnel for purposes of records keeping; and 11, Strengthen the linkages with other officials and agencies such as the Register of Deeds and real estate dealers who are sources of property information. [Gnalsis of the Revenue Performance of Local Taxes on Real Properties, CYs 2001-2005 15}