GOVERNMENTS should consider increasing the taxes on properties and wealth to raise more revenues to fund post-pandemic relief programs and at the same time, narrowing the gap between the poor and the rich, according to Asian Development Bank (ADB) experts.
“Governments will need to raise taxes once the pandemic abates. A possible solution lies in taxing property and wealth,” tax policy consultants Sissie Fung and Brian McAuley, along with public management specialist Go Nagata, wrote in a blog published on the ADB website on Friday.
Governments, they said, will eventually need to hike taxes to boost revenues to support a long-term and sustainable recovery. This includes programs to reduce poverty and to address inequality.
“To this end, taxes on property, such as recurrent taxes on immovable property, recurrent taxes on net wealth, taxes on estates, inheritances and gifts, as well as progressive income taxes should be considered as part of countries’ medium and long-term revenue strategies,” the experts added.
A December study by the ADB showed enhancing the outdated real property valuation system of local governments in the Philippines could drive real property tax collections up by 25% starting 2023.
“We already have all of these taxes. The tax code has all of these items without exception. The only problem with taxes on property and wealth is that the dependability of the revenue stream depends on the reliability of valuation used. That’s why we are pushing for the real property valuation and assessment reform, which is Package 3 of tax reform. That will help us value real assets better,” Albay 2nd District Rep. Joey S. Salceda said in a Viber message on Friday.
He was referring to the third package under the Comprehensive Tax Reform Program of the administration aiming to provide a single, uniform valuation base for taxation of real properties.
The House of Representatives passed its version of the bill on third reading in November 2019, while the Senate version is still pending at the committee level.
The bill is also one of the nine priority bills that the members of Legislative-Executive Development Advisory Council will endorse to President Rodrigo R. Duterte to certify as urgent.
Aside from raising taxes, Mr. Salceda said the government also has to manage its ballooning debt and the rising deficit to attain fiscal stability.
“We have plenty of work to do. Fiscal stability does not just have to be passing taxes,” he added.
Article and Photo originally posted by Business World last March 2, 2021 12:06am and written by Beatrice M. Laforga.