THE decision of how hard to push tax collection and how high to assess properties is a ‘balancing act’, said Hilario Alicante Jr., head of Cebu city’s land appraisal division.
“If we maximize our tax collection, it will discourage investors from coming in. If our assessment level is high, they may transfer to another locality,” he said.
He said there was a need to balance the city’s effort to remain a business-friendly city and the need to collect revenue.
But if the city does not implement its long overdue general revision of real properties, Cebu City will just have to rely on existing revenue sources, Alicante said.
The city government collects taxes on properties valued at P175,000 or more.
He said Cebu City adopts a “low” assessment level which is lower than its neighbors in the cities of Mandaue, Lapu Lapu, Talisay and even Cebu province.
For example, residential lots in Cebu City are assessed at 2 percent of its fair market value instead of the maximum allowed level of 10 percent under the Local Government Code, Alicante said.
In contrast, the assessment level is 18 percent in Lapu-Lapu City and 12 percent in Talisay city for residential property.
The basic tax rate on residential properties in Cebu City is 3 percent compared to 2.75 percent in Lapu-Lapu city and 2.5 percent in Talisay city.