The Department of Finance (DOF) is calling on local government units (LGUs) to update their real property taxation (RPT) to alleviate financial challenges that hinder their capacity to deliver optimal services to their constituents.

In a statement on Wednesday, Dec. 13, Finance Secretary Benjamin E. Diokno said LGUs should enhance their RPT, or "amilyar," to raise funds for crucial local public services like education, healthcare, and infrastructure.

According to data from the DOF’s Bureau of Local Government and Finance (BLGF), 70 percent of LGUs have outdated property valuations, and 111 cities and 48 provinces are failing to comply with the requirement to revalue properties once every three years.

“Real property taxation is a potent tool for wealth distribution,” Diokno said.

The BLGF estimated that the outdated valuation system for real properties has caused a revenue loss of P30.5 billion.

“By ensuring that property owners contribute their fair share to local finance, we can enhance the local governments’ capacity to provide essential local public services such as education, healthcare, and infrastructure,” the DOF chief added.

The DOF is currently pursuing the passage of a Real Property Valuation and Assessment Reform bill, which comprises the third phase of the previous administration’s Comprehensive Tax Reform Program.

These reforms are aimed at adopting the internationally recognized valuation standards and professional real property valuation, the DOF said.

“We must strengthen the potential of real property taxation to empower our local units and, in turn, stimulate economic activity at the local level,” Diokno said.

The Legislative-Executive Development Advisory Council, a consultative and advisory body to the President, has included the real property valuation bill as one of Congress' priority measures.

In addition to updating the RPT, Diokno encouraged LGUs to enhance their tax collection methods and embrace digitalization.

“By doing so, you not only fulfill your fiscal duties but also contribute to the broader objective of increasing economic activities at the local level,” the finance chief said.