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Quezon City enacts socialized housing tax for landowners

Posted on October 25, 2011 10:25:03 PM [ BusinessWorld Online ]

DESPITE OPPOSITION from residents, landowners in Quezon City will shoulder a new tax that will fund housing projects for the poor under an ordinance signed by Mayor Herbert Constantine M. Bautista yesterday.

The mayor has signed the Socialized Housing Tax of Quezon City into law after the proposed measure was approved by the city council on third and final reading last week.

The new law allows the local government to collect an additional 0.5% tax on real properties with an assessed value of over P100,000.

Based on the matrix provided by the Quezon City government, the assessed value is determined by the following: market value; assessment based on the city revenue code; and land area.

Lands are classified into residential, commercial and industrial, with each category having five classes based on location.

For example, a homeowner of a 750-square meter lot situated in first-class residential area (worth P3,000 per square meter) will pay P2,025 in Socialized Housing Tax.

Quezon City Councilor Edcel B. Lagman, Jr., who is the ordinance’s main author, has said that the new tax is expected to raise P185 million per year.

The funds will be used to purchase and develop land, improve socialized housing facilities, as well as construct core houses, sanitary cores and medium-rise buildings, the law said.

“This (Socialized Housing Tax) would benefit some 36,000 squatter families,” Mr. Bautista said in his speech after signing the ordinance.

“These families will eventually pay for their housing. Moreover, they are part of the construction of the settlements, especially the abled beneficiaries.”

The new law is based on the Urban and Housing Act of 1992 (Republic Act 7279) which requires local government units to levy such taxes to provide housing for the poor, the ordinance said.

The law also provides a reinventory of all lands and improvements in the city, which will be conducted by the city assessor together with the Housing and Land Use Regulatory Board within 180 days from the implementation of the law.

Moreover, the measure has proposed a tax rebate to those who “dutifully” pay taxes for five years.

However, the perk which will be disbursed in five tranches after the tax’s fifth year is non-transferable. “[O]nly, registered owners may avail of the tax credit,” the law read.

The ordinance is effective only for five years and will take effect after publication in a newspaper of general circulation, it added.

In an interview yesterday, Mr. Lagman’s Chief-of-Staff Glenn I. Ymata told BusinessWorld that a technical working group composed of representatives from the Office of the Mayor, City Assessor’s Office, Treasurer’s Office, City Legal Office and the Legislative Department headed by Vice-Mayor Ma. Josefina G. Belmonte is drafting the ordinance’s implementing rules which will be out “within the year.” “These (implementing rules) will outline the mode of collection for the tax,” Mr. Ymata said. “It will also specify the criteria for those who can avail of the tax rebate and whether this will be in form of cash disbursement or cash credit” as well as whether the Socialized Housing Tax is subject to the city’s 20% tax incentives for early payers.

Sought for comment, the Federation of Residents’ Associations (FORA), Inc. President Manuel K. Dayrit said in a telephone interview that they agree with the purpose of the law, but questioned the need to impose such tax.

“The Quezon City government doesn’t need additional taxes with the kind of credit reputation it has. They should be able to borrow money in preferential rates to fund socialized housing,” Mr. Dayrit said.

Moreover, Mr. Dayrit said: “Legislators should have looked at the possibility of PPP (public-private partnerships) for housing purposes.” -- Antonio Siegfrid O. Alegado
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