C O M P O N E N T 4 . 1 B

STUDY ON THE REVENUE

IMPACT OF SMV REVISION

W H Y C O N D U C T A R E V E N U E I M P A C T S T U D Y

To provide information on the effects of the proposed SMV on LGU revenue and tax burden of property owners

To provide a starting point for formulating tax policy options responsive to the revenue requirements of the LGU and to taxpayers’ ability-to-pay

To promote transparency in the property tax system

M I S C O N C E P T I O N B E T W E E N S M V R E V I S I O N A N D R P T

Misconception: Property tax is

strictly value driven

Fear of an increase in tax burden proportionate to the increase in the SMV

REAL PROPERTY TAXES

MARKET-BASED SMV

INTRODUCE NECESSARY TAX POLICY OPTIONS

LGU Budgetary

Requirement

Taxpayers’

Ability-to-pay

MARKET-BASED SMV AND RPT POLICY

Technical

Function of the

Assessor

Role of the

Legislators

P O S S I B L E R P T P O L I C Y O P T I O N S

Option 1: Reduce the tax rate, e.g. from 2% to 1.75%

Option 2: Reduce the assessment levels by 20%

Option 3: Phase implementation of the increase in the

tax, e.g.1st year: Old Tax + 50% of the increase in the tax

2nd year: Old Tax + 75% of the increase in the tax

3rd year: Old Tax +100% of the increase in the tax

Option 4: Fixed capping of the increase in the tax, e.g.

Old Tax + 30% of the increase in the tax every year for

3 years

TAX IMPACT CALCULATION

(UNDER NEW MV)

Property Classifica

tionLand Area SMV

New MV

Total Market Value

Assess mentLevel

Assessed Value

Tax RateCurrent

RPT

RPT Under New MV

Incremental RPT

Based on SMV

Based on New

MVBased

on SMV

Based on New

MVAmount % Inc.

R1100

sq.m 200 2,000 20,000 200,000 20% 4,000 40,000 2% 80 800 720 900%

C1100

sq.m 300 3,000 30,000 300,000 50% 15,000 150,000 2% 300 3,000 2,700 900%

I1500

sq.m 250 1,500 125,000 750,000 50% 62,500 375,000 2% 1,250 7,500 6,250 500%

RL -irrig -1st 1 ha. 40,300 200,000 40,300 200,000 40% 16,120 80,000 2% 322 1,600 1,278 396%

TAX IMPACT CALCULATION

(UNDER OPTION 1)

Property Classifica

tion

Land Area

SMVNew MV

Total Market Value Assess

ment Level

Assessed Value Tax Rate

Current RPT

RPT Under

Option 1

Incremental RPT

Based on SMV

Based on New

MV

Based on SMV

Based on New

MVCurrent

Option 1

Amount % Inc.

R1100

sq.m 200 2,000 20,000 200,000 20% 4,000 40,000 2% 1.75% 80 700 620 775%

C1100

sq.m 300 3,000 30,000 300,000 50% 15,000 150,000 2% 1.75% 300 2,625 2,325 775%

I1500

sq.m 250 1,500 125,000 750,000 50% 62,500 375,000 2% 1.75% 1,250 6,563 5,313 425%

RL -irrig -1st 1 ha. 40,300 200,000 40,300 200,000 40% 16,120 80,000 2% 1.75% 322 1,400 1,078 334%

TAX IMPACT CALCULATION

(UNDER OPTION 2)

Property Classifica

tion

Land Area

SMVNew MV

Total Market Value

Assessment Level

Assessed Value

Tax Rate

Current RPT

RPT Under Option

2

Incremental RPT

Based on SMV

Based on New

MVCurrent

Option 2

Based on SMV

Based on New

MVAmount % Inc.

R1 100 200 2,000 20,000 200,000 20% 16% 4,000 32,000 2% 80 640 560 700%

C1 100 300 3,000 30,000 300,000 50% 40% 15,000 120,000 2% 300 2,400 2,100 700%

I1 500 250 1,500 125,000 750,000 50% 40% 62,500 300,000 2% 1,250 6,000 4,750 380%

RL -irrig -1st 1 40,300 200,000 40,300 200,000 40% 32% 16,120 64,000 2% 322 1,280 958 297%

TAX IMPACT CALCULATION

(UNDER OPTION 3 -Year 1)

Property Classifica

tion

Land Area

SMVNew MV

Total Market Value Assess

ment Level

Assessed Value

Tax Rate

Current RPT

Potential RPT Incremental RPT

Based on SMV

Based on New

MV

Based on SMV

Based on New

MV

Under New MV

Under Option

3Amount % Inc.

R1100

sq.m 200 2,000 20,000 200,000 20% 4,000 40,000 2% 80 800 440 400 500%

C1100

sq.m 300 3,000 30,000 300,000 50% 15,000 150,000 2% 300 3,000 1,650 1,500 500%

I1500

sq.m 250 1,500 125,000 750,000 50% 62,500 375,000 2% 1,250 7,500 4,375 3,750 300%

RL -irrig -1st 1 ha. 40,300 200,000 40,300 200,000 40% 16,120 80,000 2% 322 1,600 961 800 248%

TAX IMPACT CALCULATION

(UNDER OPTION 4- Year 1)

Property Classifica

tion

Land Area

SMVNew MV

Total Market Value

Assessment Level

Assessed Value

Tax Rate

Current RPT

Potential RPT Incremental RPT

Based on SMV

Based on New

MV

Based on SMV

Based on New

MV

Under New MV

Under Option

4Amount % Inc.

R1100

sq.m 200 2,000 20,000 200,000 20% 4,000 40,000 2% 80 800 296 216 270%

C1100

sq.m 300 3,000 30,000 300,000 50% 15,000 150,000 2% 300 3,000 1,110 810 270%

I1500

sq.m 250 1,500 125,000 750,000 50% 62,500 375,000 2% 1,250 7,500 3,125 1,875 150%

RL -irrig -1st 1 ha. 40,300 200,000 40,300 200,000 40% 16,120 80,000 2% 322 1,600 706 383 119%

TAX IMPACT CALCULATION

(UNDER VARIOUS OPTIONS)

Option 1: Reduce the tax rate from 2% to 1.75%

Option 2: Reduce the assessment level by 20%.

Option 3: Phase implementation of the increase in the tax, e.g.

Year 1: Old Tax + 50% of the increase in the tax

Year 2: Old Tax + 75% of the increase in the tax

Year 3: Old Tax + 100% of the increase in the tax

Option 4: Fixed capping of the increase in the tax, e.g

Old Tax + 30% of the increase in the tax

Property Classificat

ionLand Area SMV New MV

AssessmentLevel

Tax RateCurrent

RPT

Potential RPT

Under New MV

Option 1 Option 2 Option 3 Option 4

R1 100 sq.m 200 2,000 20% 2% 80 800 700 640 440 296

C1 100 sq.m 300 3,000 50% 2% 300 3,000 2,625 2,400 1,650 1,110

I1 500 sq.m 250 1,500 50% 2% 1,250 7,500 6,563 6,000 4,375 3,125

RL -irrig -1st 1 ha. 40,300 200,000 40% 2% 322 1,600 1,400 1,280 961 706

REVENUE IMPACT CALCULATION

(P MILLION)

Property Type

Adj MV (Based

on SMV)

Ave. % Inc.

New MV A. Level Tax Rate Tax Collectible

Coll. Eff.

RPT Coll. @ Current Coll Eff.

Increase in RPT

RevenueBased On

SMVBased on

MVBased On

SMVBased on

MV

TOTAL 37,813 155% 96,297 210.59 570.32 53% 112.21 308.26 196.05

Residential 27,627 135% 63,957 20% 2% 110.51 255.83 45% 49.73 115.12 65.39

R-1 11,051 120% 24,312 20% 2% 44.204 97.25 45% 19.89 43.76 23.87

R-2 7,459 100% 14,918 20% 2% 29.836 59.67 45% 13.43 26.85 13.43

R-3 6,354 150% 15,885 20% 2% 25.416 63.54 45% 11.44 28.59 17.16

R-4 1,658 180% 4,642 20% 2% 6.632 18.57 45% 2.98 8.36 5.37

R-5 1,105 280% 4,199 20% 2% 4.42 16.80 45% 1.99 7.56 5.57

Commercial 1,579 200% 4,737 50% 2% 15.79 47.37 60% 9.47 28.42 18.95

Industrial 7,716 200% 23,148 50% 2% 77.16 231.48 65% 50.15 150.46 100.31

Agricultural 891 400% 4,455 40% 2% 7.128 35.64 40% 2.85 14.26 11.40

D A T A R E Q U I R E M E N T

Assessment Roll• With entries on location of property, land

area, property sub-classification, unit value, market value, assessed value, etc.

Old and New SMV• With information old and new property

classification; and old and new unit value for different locations/areas

COMPUTERIZED ASSESSMENT ROLL

SN # Tax Dec # BarangayProperty Owner

Property Type Taxability

Property Sub-Class Area

Unit Value Adj MV AL

Assessed Value

Tax Rate RPT Collectible

Basic RPT SEF Basic RPT SEF

12001-11-0473-1 Abella

Santos,Ramona Land T R1 250 400

100,000.00 20% 20,000.00 1% 1% 200.00 200.00

22001-11-0123-3 Abella Sese, Pura Land T R1 100 400 44,000.00 20% 8,800.00 1% 1% 88.00 88.00

32001-11-0473-1 Abella

Torres, Abad Land T R1 230 400 92,000.00 20% 18,400.00 1% 1% 184.00 184.00

42001-11-14473-1 Abella

Villanueva, oniaT Land T R1 140 400 56,000.00 20% 11,200.00 1% 1% 112.00 112.00

52001-11-0473-1 Abella

Santos, Perla Land T R1 120 400 48,000.00 20% 9,600.00 1% 1% 96.00 96.00

6

2001-1110473-

1 AbellaSenseng, wilfredo Land T R2 120 300 32,400.00 20% 6,480.00 1% 1% 64.80 64.80

72001-12-21473-1 Abella

Rosales, Juan Land T R2 120 300 36,000.00 20% 7,200.00 1% 1% 72.00 72.00

82001-12-0473-1 Abella

Rosales, john Land T R2 100 300 30,000.00 20% 6,000.00 1% 1% 60.00 60.00

92001-12-0473-1 Abella

Bautista, Feliciano Land T R2 300 300 90,000.00 20% 18,000.00 1% 1% 180.00 180.00

102001-122-

0473-1 AbellaReyes, Nick Land T R2 120 250 30,000.00 20% 6,000.00 1% 1% 60.00 60.00

112001-31-0473-1 Abella

Nicolas, Pedro Land T R2 150 250 37,500.00 20% 7,500.00 1% 1% 75.00 75.00

6

2001-1110473-

1 AbellaNicolas, Mario Land T R3 60 250 15,000.00 20% 3,000.00 1% 1% 30.00 30.00

72001-12-21473-1 Abella

Marasigan, Pearl Land T R3 60 250 13,500.00 20% 2,700.00 1% 1% 27.00 27.00

82001-12-0473-1 Abella

Solomon, Maria Land T R3 60 250 15,000.00 20% 3,000.00 1% 1% 30.00 30.00

92001-12-0473-1 Abella

Ramos, Nora Land T R3 60 250 15,000.00 20% 3,000.00 1% 1% 30.00 30.00

OLD AND NEW SCHEDULE OF MARKET VALUE

STREET/SUBDIVISION VICINITY 2001 BASE VALUE

SUB CLASS2006 BASE

VALUESUB CLASS

ABELLA 001

Abella StreetGen. Luna St. J. Hernandez Ave. 12,900 C-1 25,000 C-2

J. Hernandez Ave. - 1st 100m. 9,700 C-2 15,000 C-3

after 100m - Cnr Felix Plazo St. 2,500 C-5 12,500 C-4

Cnr F. Plazo St.-Naga 1,200 R-1 4,000 R-1

Bayawas Street Abella Street-Looban 8 1,200 R-1 4,000 R-1

Felix Plazo Street Abella St.- Igualdad Boundary 1,200 R-1 4,000 R-1

All inner lots 720 R-3 2,000 R-5

J. Hernandez Ave. Prieto St.-P. Burgos St. 12,900 C-1 25,000 C-2

General Luna St Prieto St.-P. Burgos St. 12,900 C-1 35,000 C-1

P. Burgos Street Gen. Luna St.-J. Hernandez 12,900 C-1 35,000 C-1

Prieto Street J. Hernandez St.-Gen. Luna St. 12,900 C-1 25,000 C-2

BISALA 720 R-3 2,000 R-5

All Blighted Areas 200 R-5 500 R-8

P R O C E D U R E

For LGUs with computerized assessment rolls1. Replace the existing SMV with the new MV and

calculate the difference between the estimated RPT under the old and new SMV. All RPUs , OR Large Taxpayers (say Top 100) Representative Sample RPUs

2. Determine the range of increase in values.3. Identify areas heavily affected by the increase in

values.

P R O C E D U R E

For non-computerized LGUs 1. Conduct selective tax impact studies on Top ___ Taxpayers (contributing at least 60% of

total RPT collection) Sample RPUs

2. Determine the range of increase in values.3. Identify areas heavily affected by the increase in

values.

O T H E R F A C T O R S T O B E C O N S I D E R E D I N T H E R E V E N U E

I M P A C T C A L C U L A T I O N

Discounts Fines and Penalties RPT Incentives RPT Compliance Rate

THANK YOU!