Property taxes reforms to speed econ recovery

THE Philippines and other countries in the Asia-Pacific region could reform property taxes to speed up pandemic economic recovery, an Asian Development Bank (ADB) blog said.

The “How governments can use tax policy to speed pandemic recovery” blog written by Sissie Fung, Brian McAuley and Go Nagata pointed out that governments will need to raise taxes once the pandemic caused by the coronavirus disease 2019 (Covid-19) abates.

The authors said that governments around the world responded to the pandemic by ramping up public spending to strengthen healthcare systems and social protection, and boost the economy.

Tax collections, however, are declining, adding that the pandemic “has driven these revenues further down, and brought socioeconomic hardship on a scale not seen before.”

The authors said this is expected to push tens of millions of people in the region into extreme poverty, sharpen pre-existing inequalities, and roll back decades of progress on sustainable development.

“A possible solution lies in taxing property and wealth. Over the past two decades, the Asia-Pacific region has undergone a remarkable economic transformation. However, it has also brought with it a surge in income inequality,” they said.

“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,” they added.

The authors, citing ADB’s report titled “Mapping Property Tax Reform in Southeast Asia,” said that in the Philippines, Cambodia, Thailand and Vietnam, the scope for raising revenue by increasing taxes is noticeably clear.

“Property tax reforms in these countries can contribute to broader government strategies, and can benefit from coherence with other systems, as well as government functions related to land management,” the authors said.

The authors said that according to the study, the Philippine government is embarking on the Real Property Valuation and Assessment Reform program

They said this will usher in efficient, transparent and equitable real property valuation and transaction systems at the Bureau of Local Government Finance.

“It is estimated to yield incremental real property tax collections at local government units by 25 percent in 2023 onwards,” according to the authors.