Iloilo’s property boom triggers 300-percent tax increase

BUSINESS PARK A portion of Iloilo City’s Business Park shows its economic progress, as seen in this photo taken on Jan. 1, 2024. With massive developments and real property boom, Ilonggos are facing a 300 percent rise in real property tax in 18 years. —Ruchelle Denice Demaisip

ILOILO CITY, Philippines — Ilonggos are grappling with a steep 300-percent hike in real property tax (RPT) as this city pushes forward with its first adjustment in 18 years.

Councilor Rex Sarabia, vice chair of the council’s ways and means committee, explained the increase was a natural result of the city’s economic growth and booming real estate market.

“An increase in RPT is expected when there are massive developments and a prolonged real property boom in the city,” he said in a Facebook post on Oct. 16.

READ: Iloilo’s resplendent property market

Sarabia explained that Iloilo’s property values have surged over the last two decades, leading to a necessary tax update through Tax Ordinance No. 2023-226, which became effective this year.

“Eighteen years ago, a cup of rice was only P5, and jeepney fares were P5. That’s how long the fair market values (FMV) were left untouched,” he shared, stressing that Iloilo City’s economy in 2006 vastly differed from what it is today.

Sarabia highlighted staggering growth rates to illustrate the real estate boom.

The FMV of properties along Diversion Road jumped from P8,000 per square meter in 2006 to P37,000 today—a 530-percent increase. Properties in the city’s Megaworld area saw an even higher leap, from P2,500 to P18,500 per square meter, representing a 740-percent boost.

“These numbers show that property investments in Iloilo outperform even global financial investments, including the Philippine Stock Exchange Index,” Sarabia said.

End of leniency

He added that while international markets average annual growth rates of between 4 percent and 8 percent, Iloilo’s property values have been rising by 20 percent to 40 percent per year.

Sarabia pointed out that property owners have benefited from 18 years of tax leniency, saving significant amounts while the city suffered from missed revenue opportunities.

He explained that Iloilo’s outdated property values resulted in “opportunity losses” for the city, a concern raised by the Commission on Audit in a March 2023 memo that urged the city to revise its FMVs.