LGUs should tax idle agri land--study
By Jesus F. Llanto, abs-cbnNews.com/Newsbreak | 11/07/2008 3:30 PM
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Local government units have been missing a lot of potential revenues because of their slow and weak implementation of taxes on idle agricultural lands, a study by the La Liga Policy Institute and the Development Academy of the Philippines showed.
According to the recently-published book by the LLPI and DAP, Enhancing Taxation on Idle Agricultural Lands: A Policy Study in Aid of Legislatio, despite the presence of laws and policy directives, LGUs have been slow in imposing tax on idle agricultural lands.
The Philippine government has been imposing taxes on idle lands since 1974, when former President Ferdinand Marcos signed Presidential Decree 464, which enacted a real property tax code.
Francisco Lara and Rachael Morala, authors of the book, said that a lack of clear definition of “idle land” and of investment on tax mapping, the cost of implementation, and politics have hampered LGUs from implementing taxes on idle agricultural lands.
“Full implementation of idle land tax also faces resistance from big land owner—politicians in the areas, suggesting the need for strong local government push, consultations and consolidation of support,” the authors wrote.
Varying definitions
The authors noticed that there has been no clear definition of idle agricultural lands.
The Local Government Code (LGC) of 1991, which devolves to LGUs the power to generate income by levying taxes, fees and charges, defines idle agricultural lands as those lands that are suitable for cultivation, dairying, inland fishery, and other agricultural uses, but has one half of its area uncultivated or unimproved.
Statistics on idle agricultural lands differ since different offices used varying definitions. The 2002 Census of Agriculture by the National Statistics Office showed that 119,461 hectares of the 9.7 milion hectares of farm area are considered idle. NSO defines idle farms as “lands temporarily fallowed” and “lands under temporary meadows/ pasture”.
Meanwhile, the Philippine Agribusiness Lands Investment Center (PhilAgriBizLands Center ) used the Department of Agriculture’s definition of idle agricultural lands—unutilized and underutilized lands with potential for agricultural and fishery production—when it made a study on 2006 on the status of idle and underutilized agricultural lands.
PhilAgriBizLands Center estimates that 8.8 million of the 9.3 million hectares of agricultural lands are considered as idle.
Agrarian reform and food security
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Imposition of idle agricultural land tax helps solve the issue of agrarian reform and food security, said Lara. Taxes on these unproductive agricultural lands, Lara added, will make land owners chose between paying large taxes or putting their huge tracts of land voluntarily under the agrarian reform program.
The recent food crisis, Lara said during the launch of the book, also highlighted the need to increase productivity and to make use of unproductive agricultural lands. “Because of food crisis, there was an added impetus to increase agricultural productivity.
“Keeping agricultural lands idle puts to waste a scarce and valuable economic resource necessary for the production of agricultural produce including staples such as rice and corn and other basic food items,” the authors wrote.
More revenues for LGUs
Lara also said implementation of the taxes on idle land would increase the local revenues of local government units.
Former agrarian reform secretary and LLPI president Horacio Morales Jr. said that taxes collected from idle agricultural land could help improve finances of the local governments because it allows LGUs to “extract public revenues to support public finance.”
Lara and Morada believe that revenues of most LGUs increased because of “increasing grants and transfer from the national government” and not because of improved tax collection.
“Increasing IRA [Internal Revenue Allotment] has made the LGUs more dependent on the national government grants and serve as disincentive for the LGUs to maximize their revenue-raising powers,” the authors wrote.
Most of the local government units have low local revenue generation capacity and still rely heavily on the IRA or their share from the taxes collected by the national government. The 2007 financial report on the LGUs of the Commission on Audit (CoA) showed that 62.43 % of the LGUs income comes from their share in the IRA.
