Business owners in Baguio have asked for a review of the property tax ordinance, saying the fees are exorbitant and are not reasonable at a time when businesses are struggling from the impact of the pandemic.
Representatives from the hotel and restaurant industry told the city council the increase in real property tax, which they said went to as high as 4,000 percent, is not equitable and may lead other businesses to forego environmental preservation in favor of constructing more buildings to recoup the taxes they are paying for their real properties.
Baguio Country Club legal counsel Christine Angelica Elvena said based on their sampling, the highest possible increase in fair market value of residential is 2,300 percent and 4,778 percent for commercial.
She said for one sample, the increase in the tax of a 200-square meter residential property was from P260 to P6,000, which is an increase of 2,300 percent.
Other samples showed that from P4,700 annual tax, it went up to P15,000 while for another, the increase was from P800 to P12,500, which is 1,463 percent.
For commercial properties, Elvena said one sample showed an increase from P4,100 to P18,000, which represents a 339 percent increase. Another sample showed an increase from P410 to P20,00 or 4,778 percent increase and from P1,140 to P20,000, which represents a 1,654 percent increase.
The increase in real property taxes was implemented on a staggered basis, starting from the 70 percent collection in 2020. Full or 100 percent collection was implemented last year.
For BCC, the increase in taxes was from P4 million to P11M.
“We understand that the fair market values did not increase in the past several years, but we are lobbying if there could be a way to at least mitigate the impact of the increase as we believe it is highly confiscatory,” Elvena said.
Jeannine Chan, owner of Mt. Lodge, shared the view, adding even homeowners associations are complaining that the increase is exorbitant.
“Even if we look at where you got the basis for the increase that says it’s supposed to be equitable, there’s nothing equitable in the assessment (of taxes), there’s nothing fair about it,” she said.
Chan said for a commercial property surrounded by trees like Mt. Lodge, owners may just decide to cut the trees and construct buildings in order to recover the taxes being paid.
“We can’t make money from the trees so we might as well cut them in favor of buildings. This is how this ordinance is pushing us – to sell out or build more,” she said.
Chan said their tax due used to be P65,000, but this increased to P259,000 this year.
City Assessor Maria Almaya Addawe said the increase in the assessment of taxes is a result of the several years that the city’s fair market values were not updated.
She said the reason why taxes for some properties have increased was due to their conversion from residential to commercial.
She said there are 324 properties used for residential that changed to commercial. The total assessed value of these properties increased to P346.2M from P31.9M or an increase of 983 percent. The taxes collected also increased to P10.3M from P959,382.
There were also 1,231 commercial properties that were upgraded, increasing their total assessed value to P1.7 billion from P530M or 228 percent increase. The total taxes collected from these properties increased to P52.2M from P15.9M.
Addawe said the total taxable properties in Baguio is 62,398 with an assessed value of P5.8B, an increase from the previous P2.2B as a result of the revision of the city’s fair market values. The increase in taxes is from P62M to P174M.
Councilor Betty Lourdes Tabanda has asked finance officers to review the schedule of fair market values and study the possibility of granting incentives to real estate owners with open spaces and areas planted to trees.
She also asked the Assessor’s Office to consider the assessment of taxes based on the actual use of a property to help mitigate the impact of the increase in real property taxes.
She suggested for a property located in a commercial area and with portions planted to trees, the assessment of taxes should only be based on the portions that are actually used for commercial purposes.
Addawe said they have started discussing on how to grant tax incentives to lots planted to pine trees.
Councilor Mylen Yaranon said incentives should not only be given to property owners who maintain trees in their areas, but also those who maintain open spaces.
Taxpayers who have questions on how their properties are assessed for taxes may file complaints before the Local Board of Assessment Appeals.
Addawe said taxpayers have 60 days to file their appeal if they have questions on their tax assessments.
She added there are no questions filed so far regarding the ordinance that updated Baguio’s fair market values. – Jane B. Cadalig
April 27, 2024
