Have you ever heard of a tax that will make you pay a rate that is one thousand eight hundred percent higher than the amount you paid last year?
Most of us have not. This one is for the books. It is a record of sorts. But it is a record most will find not likable.
We are referring to the 2024 increase in the BIR Zonal Values applicable to real estate properties nationwide. In the City of Tacloban and nearby towns, the new rates took effect last January 14, 2024.
It will dramatically increase payments for real property tax, capital gains tax, estate tax and documentary stamp tax. Thus, it you paid a capital gains tax of 10.000 pesos last year for property you bought at that time, and you want to buy a similar property your capital gains tax would be 10,000 multiplied by 18 or 180,000. Buying real property suddenly become very expensive, thereby discouraging investments.
Sellers would like this but the buyers will not. However, considering the run-away prices, few will dare buy real properties at this time, except for a few elites. And those who are not selling but keeping their properties will be hard hit as they struggle to pay the real property taxes.
The existenceof these new rates were described by a representative of the BIR in a meeting of the Development Administration Committee of the Regional Development Council. However, the BIR official did not reveal the rates.rates per square menter of land.
The presentor showed that the revisions followed a process which had a committee where the private sector was represented, and that it has been more than 20 years since the last revision was made.
This columnist cited two points based on what was presented. One was that the private sector representative was the organization of real property appraisers. The other is that it is important to cite the increase in peso terms in specific locations to see the extraordinary burden that these rates have created.
The appraisers may be consulted but it should be understood that these appraisers may actually want to jack up real estate values because they base their professional fees on these rates. In other words, they will gain from an increase in real property values. More private groups should have been consulted.
The lack of figures representing the rates can be seen as an attempt to hide the truth that the public is being overtaxed in this increase to the point that the imposition borders on being confiscatory. Taxpayers will find it difficult to pay as expressed by a member of the committee whose family actually experienced an inability to pay because what was pegged at around 30,00 pesos in tax payment was now assessed as needing almost half a million pesos.
In the presentation of tax revenues in July 2024 this inability is obvious because the revenues increased by some fifty present only when it should have increased by 1,800 percent. Taxpayers are putting off payment or paying in installment because of this heavy tax burden.
This columnist added that the Regional Development Council must pay attention to this and seek remedial action. The increase is inflationary as it will make agricultural goods more expensive as landowners will pass the burden of the increase on consumers. The increases in food prices will be significant. It could drive the price of rice further up instead of going down especially in a region which relies on agriculture as a major source of family income.
The inflation rate is about 3 to 5 percent per year. Even if the Zonal values have not changed in 25 years, this would only result in a 125 percent increase if updated based on the increase in prices of all commodities, including land, multiplying an average inflation of 5 percent times 25 years. Therefore, the increase should certainly not be1,800 percent.
This columnist, seconded by Atty, Roy Fiel of the private sector representing agriculture, moved that in the next meeting of the committee, the BIR should show figures on the increase and justifications for such. This should have been discussed and settled in that meeting, but the statistics were not available. A topic such as this deserves everybody’s attention and certainly requires an equitable solution that will not jeopardize existing efforts to reduce the price of goods, including rice, and thereby improve the poverty situation.
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