By Rjay Zuriaga Castor
The Iloilo City Council has unanimously approved an ordinance that imposes a 40 percent reduction on the levy of real property tax under the approved increase for two years from fiscal year 2024-2025 only.
The ordinance was swiftly approved after passing its first reading during the regular session of the council on Wednesday, January 10.
The ordinance provides that taxpayers in the city will be allowed to pay only 60 percent of the real property tax in terms of land.
Iloilo City Mayor Jerry Treñas announced the proposal of a reduced tax following a meeting with City Administrator Melchor Tan, City Assessor Cesar Jalbuena Jr., City Treasurer Jinny Hermano, and Executive Assistant Nelson Parreño on Tuesday, January 2.
With the effectivity of the ordinance, the full 100 percent payment of real property tax will take effect in 2026.
For any taxpayer who has paid the full amount, the appropriate reduction or tax credit will be granted, according to the approved ordinance.
Excluded from the approved ordinance is the levy of additional Ad Valorem Tax on Idle Lands.
The City Council approved the updated valuation framework for lands and buildings for real property on June 27, 2023. The land levy rate increases from 1.5 percent to two percent for all lands based on the assessed value of the real property.
The additional Ad Valorem Tax on Idle Lands also saw an increase from one percent to two percent for residential lands and from two percent to three percent for agricultural, commercial, and industrial lands.
Councilor Rex Sarabia, chairperson of the Committee on Appropriations, who also authored the ordinance, said the city government is constrained to impose a higher tax on real property since the last increase was in 2006.
“The city of Iloilo is constrained to update our real property values because, to be fair, it has been 18 years since the last update. It is only fair that we update the values, and, of course, we have to consider that the city is offering more services,” he said.
The increase in real estate property taxes in the city that will take effect this year is the first increase since 2006.
Treñas previously said that no increase was imposed in the last 18 years since the city government has enough revenue to deliver public services and sustain the city’s economic sustainability.
Sarabia explained that one of the reasons why idle lands were excluded from those covered by the ordinance was to encourage property owners to develop them.
“The tax on idle land is higher because there is no building, and its exclusion to the ordinance is to also encourage owners to develop it for economic stimulation on the land,” he said.
Sarabia said he also understands the complaints of property owners considering the sudden increase and the skyrocketing prices of goods and services, emphasizing that the move is also a “risk” from the city government.
The city councilor added that while the 40 percent discount for two years is significant, he noted that it does not pose a risk of incurring a deficit in the city’s budget.
“When we calculated the city’s budget for the calendar year 2024, there is some leeway,” he said.
Meanwhile, the Iloilo Business Club Inc. held a round table discussion on the recent measure of the city government on real property tax on Wednesday afternoon.
Daily Guardian has learned that the organization will be submitting a position paper to the city government.
The Riverside Group of Companies also told Daily Guardian that while they welcome the discount, there is still nothing celebratory about it since they still have to adjust rental rates for their lessees.
“Commercial property owners cannot celebrate yet. Assuming we pay 60% based on the city government’s press release, it still appears to be higher than the previous assessment, which seems challenging to pass on to our lessees as a sudden increase in our rental rates would be burdensome for them,” it said.
The private equity investment firm asserted that even a 10 percent annual increase, which they claim they do not currently impose, is already substantial for their lessees.
They further argued that they must carefully assess how much they can reasonably increase their rentals without adversely affecting their lessees.
“If they decide to close down, it will also reduce the city’s taxpayers. We all lose. The economy may suffer, and there will be no opening of new businesses,” the group added.
It can be recalled that in a letter addressed to Treñas on December 19, 2023, the group expressed shock over the significant increase in their property taxes from 2023 to 2024.
In 2023, the taxes levied on Riverside Boardwalk Properties, Inc. amounted to P584,283.56, but it soared to P7,564,856.93 in 2024. Similarly, for properties under Riverside Holdings, Inc., real estate taxes increased from P376,119.76 in 2023 to P3,330,504.58 in 2024.
In response, the city government clarified that the complaint lodged by the Riverside Group of Companies pertains to the market value and assessed value of a property and not the actual rates for real property tax.
According to Treñas, the market value needs to be multiplied by the assessed value to determine the actual tax obligation for the property.