Wednesday, July 8, 2009 | MANILA, PHILIPPINES [ BusinessWorld Online ]
THE NATIONAL Tax Research Center (NTRC), an agency attached to the Finance department, has opposed a measure seeking to exempt real properties owned by Philippine National Red Cross (PNRC) from real property tax, whether or not these are used for charity.
NTRC argued that this would deprive local governments of much-needed revenues.
The proposal, contained in Senate Bill no. 2591, authored by PNRC Chairman Sen. Richard J. Gordon and Senate Majority Leader Juan Miguel F. Zubiri, covers the use, lease, or sale of all the real properties owned by PNRC.
This effectively increases the existing fiscal perks given to the group which include exemption from duties, taxes, and other fees on all importation and purchase of equipment for its exclusive use and on donations for its disaster relief work and fund-raising drives.
At present, only those lands, buildings, and improvements "actually, directly and exclusively used for charitable institutions" are exempted from real property tax, as provided by the Constitution.
The authors of the bill have claimed that the provision of tax incentives to the PNRC is necessary to enable it to sustain its operations.
In a position paper dated June 30, however, the NTRC said exempting the PNRC from real property tax may not be advisable due to its impact on the revenue sources of local governments.
"This [provision] would reduce the taxable base of some local government units where the properties of the PNRC and similar organizations are located and this may affect the productivity of the real property tax which is one of the major sources of local governments," the research body said. "This is not consistent with the policy of enhancing local fiscal autonomy as enunciated by the LGC [Local Government Code]."
NTRC said the proposal is also discriminatory. "The proposed additional exemption would discriminate against similarly situated property owners who will not be exempted from the tax. It could also set a precedent for similarly situated organizations and property owners to demand for the same privilege." — ADBR
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