President Marcos has signed the Real Property Valuation and Assessment Reform Act (RPVARA), raising concerns among property owners about its potential impact on their yearly property taxes, often referred to as "Amilyar."

Addressing these worries, Finance Secretary Ralph G. Recto swiftly moved to clarify that the new law will not automatically lead to a hike in current property taxes.

Recto explained that "Amilyar" is a local tax imposed by local government unit (LGUs) on real property, such as land.

Recto stressed that LGUs will retain the authority to determine these tax rates under the RPVARA law.

“The law will harmonize real property valuation,” Recto told Manila Bulletin after the signing of the RPVARA law. “The increase in real property taxes is within the power of Local Government Units.”

Despite the law's aim to streamline property valuation across all LGUs, Recto reassured that “It does not require LGUs to raise taxes.”

Former Bureau of Internal Revenue (BIR) Commissioner Kim Henares, on the other hand, expressed doubts that the RPVARA would not impose an additional burden on property owners.

“What’s the point of these reforms if they do not generate extra revenues, particularly for LGUs?” Henares told Manila Bulletin.

Although she admitted she has not yet read the newly-signed law, Henares said that the objective of RPVARA is to align LGUs' valuation schedule with the zonal value used by the BIR.

Henares, however, said that property taxes will still be determined by the rates set by the LGUs using their own formula.

"LGUs have the ability to devise a formula that keeps tax rates reasonable while meeting legal requirements. However, some LGUs may also exploit this law as a justification for making rate adjustments," she said.

According to the Department of Finance (DOF), RPVARA, or Republic Act No. 12001, only aims to enhance tax collections without raising tax rates by expanding the tax base for property and related taxes.

The law will establish a unified system of property valuation aligned with international standards, serving both local and national taxation purposes.

This reform will also professionalize assessors, separating the technical valuation process from the political taxation aspect, and addressing issues such as overregulation, policy overlaps, and jurisdictional inconsistencies resulting in varying valuations.

Currently, there are over 20 government agencies involved in several valuation processes.

To standardize property valuation, the RPVARA employs the Philippine Valuation Standards (PVS) based on the International Valuation Standards (IVS). This principle-based standard promotes transparency, consistency, and maintains public trust in valuation practices.

Implementation of a standardized valuation system includes establishing an electronic Real Property Information System (RPIS) database to consolidate all real property transactions.

This database will involve the collaboration of Registers of Deeds, the Bureau of Internal Revenue (BIR), notaries public, and other entities.

The RPIS will transmit real property transaction data to the Bureau of Local Government Finance (BLGF) to assist in creating the Schedule of Market Values (SMVs) and developing the database.

Furthermore, the law introduces the Real Property Tax Administration Fund (RPTAF), earmarked for updating SMVs, revising real property assessments, and administering real property taxes across all LGUs.

LGUs will also need to allocate funds from local revenues, national tax allotments, or other sources annually.

To support third- and lower-income class LGUs in creating the RPTAF, the Secretary of Finance, through the BLGF, will provide subsidies sourced from the national government.

The law also offers a real property tax amnesty covering penalties, surcharges, unpaid real property taxes, Special Education Fund, idle land tax, and other levies before RA 12001's effectiveness.