Factors Affecting Collection of Real Property Tax in the Provincial Treasurer’s

Office of Nueva Ecija

By : Larcy Ventura Villaroman

Abstract
This paper focused on studying the factors affecting the collection of real property
tax in the Provincial Treasurer’s Office of Nueva Ecija, Philippines. The respondents
were the twenty-seven (27) Municipal Treasurers of the municipalities of Nueva Ecija.
The study was guided by the Principles of Theories of Taxation. Specifically, this study
aimed to: 1) determine the level of adherence of the Provincial Treasurer’s Office of
Nueva Ecija with the Basic Principles of Sound Tax System; 2) analyze the collection
efficiency of Real Property Tax; and 3) determine the problems/challenges met in the
collection of Real Property Tax. The study used a mixture of qualitative and quantitative
method. The data was sourced from the Provincial Treasurer’s Office, which is the
Checklist of twenty-seven (27) municipalities with corresponding Real Property Tax
Collection and Target Collection for the year 2016. It also involved the description and
determination of efficiency through observation and analysis of the data gathered and
observed. The Efficiency Index was used. The study showed the need for strict
adherence with the Basic Principles of Sound Tax System.

Subject Area:
Local Governance

Keywords:
Real Property Tax, Local Government Unit, Tax Collection, Nueva Ecija
Affiliation:

Nueva Ecija University of Science and Technology, Philippines

1. Introduction

For more than three decades, the national government has hardly been able to

shoulder the expenditures needed to provide social and other developmental services.

Problems of poverty and unemployment beset the Philippine Population. Because of lack

of funds, access to health and social services, educational facilities, to housing

opportunities and infrastructure cannot be adequately addressed. [1]

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 The state recognizes that there is a need to provide sufficient powers, authority,

responsibilities and resources to the Local Government Units (LGUs) to make them self-

reliant communities. Thus, among the authorities and powers granted to LGUs under RA

7160, otherwise known as the Local Government Code (LGC) of 1991, is the power to

generate resources to supplement national government’s assistance through Internal

Revenue Allocation (IRA) and grants. Under Section 18 thereof, LGUs are authorized to

levy taxes, fees and charges and create other sources of revenues for its exclusive use and

disposition. The power to impose fee/charge or generate revenue under the Code is

exercised by the Sanggunian through an appropriate ordinance. [2]

Section 17 of the Local Government Code (LGC) enumerates the range of

responsibilities LGUs must perform. As local communities grow, there has been

increasing pressure to generate additional resources and enhance efficiency in the

allocation of these resources towards providing better service to the constituents.

The exercise of the taxing and other revenue-raising powers of LGUs is, however,

governed by the following fundamental principles: a.) Taxation shall be uniform in each

local government unit; b.)Taxes, fees, charges and other impositions shall be equitable

and based as far as practicable on the taxpayer’s ability to pay, be levied and collected

only for public purposes; not be unjust, excessive, oppressive or confiscatory; and not be

contrary to law, public policy, national economic policy, or in restraint of trade, c.) The

collection of local taxes, fees, charges and other impositions shall, in no case, be let to

any private person, d.) The revenue collected pursuant to the provisions of the Code shall

accrue solely to the benefit of, and be subject to disposition by, the LGU levying the tax,

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fee, charge or other imposition unless, otherwise, specifically provided therein, and, e.)

Each LGU shall, as far as practicable, evolve a progressive system of taxation.

After 26 years of implementation of RA 7160, and despite the taxing powers of

the LGUs, a number of municipalities are yet to be financially self-reliant as they

continue to depend on IRA, loans and grants to sustain their operations and

developmental projects.

One area where LGUs can concentrate their efforts in revenue generation is in

real property tax collection. Despite the taxing powers of the Provincial Treasurer’s

Office to generate revenues through collection of Real Property Tax, there is a gap in

knowledge on what are the factors affecting collection of real property tax to show

efficiency. On the contrary, the PTO set Collection Target every year to measure the

efficiency of twenty seven (27) municipalities. One parameter to measure the efficiency

of 27 municipalities is by using the Collection Efficiency Ratio adapted from Bureau of

Local Government Finance.

According to Li (2017), organizational efficiency is the ability to create the right

plans needed to accomplish the aims, pull together the resources needed, and then use

these resources in order to implement plans. Moreover, this means implementing

plans using the smallest possible expenditure of resources. It is an important factor in the

firm's organizational effectiveness, this being the ease and degree of success with which

the organization is able to accomplish its aims. [3]

Based on these ideas, the researcher was motivated to undertake this study in

order to close the gap between the current state of tax collection of LGUs in Nueva Ecija

and find its implication to economic development.

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 The main objective of the study is to measure the organizational efficiency in the

collection of RPT in the province of Nueva Ecija. Specifically, it will answer the

following:

1. To what extent does the Provincial Treasurer’s Office of Nueva Ecija

adhere with the Basic Principles of Sound Tax System?

2. How may the collection efficiency of Real Property Tax be described in

PTO?

3. What are the problems/challenges met in the collection of Real Property

Tax?

2. Research Methodology

Study Locale

The study locale is in the Province of Nueva Ecija situated in the eastern rim of

the broad Central Luzon Plains. The province is bounded and strategically located along

three regional boundaries: the province of Pangasinan (Region II) in the North; the

province of Aurora in the East; the province of Tarlac in the West; and the province of

Bulacan and Pampanga in the South.

The province is composed of 27 municipalities and 5 cities with an aggregate of

849 barangays. It has a total land area of 550,718 hectares where 64% or 352,460

hectares are alienable and disposable lands and the remaining 36% or 198,258 hectares

are forestlands. [4] (Figure 1)

Study Design

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 This study used mixture of qualitative and quantitative method. The data was

sourced from the Provincial Treasurer’s Office, which is the Checklist of twenty seven

(27) municipalities with corresponding Real Property Tax Collection and Target

Collection for the year 2016. It also involved the description and determination of

efficiency through observation and analysis of the data gathered and observed. The

Efficiency Index yielded the following Score and its Verbal Description, to wit;

Verbal Description Score

Most Efficient 91% - 100%

Much Effcient 81% - 90%
Efficient 71% - 80%
Least Efficient 51% - 70%
Inefficient 0% - 50%

Figure 1. Location of Nueva Ecija. Source: Google Maps. 2017.

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Respondents

The respondents were the twenty seven (27) Municipal Treasurers of the

municipalities of Nueva Ecija. They are the following:

1. Aliaga 10. Jaen 19. Rizal

2. Bongabon 11. Laur 20. San Antonio
3. Cabiao 12. Licab 21. San Isidro
4. Carranglan 13. Llanera 22. San Leonardo
5. Cuyapo 14. Lupao 23. Santa Rosa
6. Gabaldon 15. Nampicuan 24. Sto. Domingo
7. Gen. Natividad 16. Pantabangan 25. Talavera
8. General Tinio 17. Peñaranda 26. Talugtug
9. Guimba 18. Quezon 27. Zaragoza

Theoretical Framework

The study is guided by the Principles of Theories of Taxation. Governments at all

levels (national, regional and local) need to raise revenue from a variety of sources to

finance public-sector expenditures.

Adam Smith in The Wealth of Nations (1776) wrote:

"Such things as defending the country and maintaining the institutions of good

government are of general benefit to the public. Thus, it is reasonable that the

population as a whole should contribute to the tax costs. It is also reasonable to

demand certain other things of a tax system – for example, that the amounts of tax

individuals pay should bear some relationship to their abilities to pay.” [5]

A report made by Vicente in 2006 explained that tax leakage is pervasive in the

various direct and indirect taxes collected by the Bureau of Internal Revenue. The author

further noted that studies worldwide identify a wide range of factors that may cause and

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sustain tax evasion and avoidance. Tax evasion and avoidance is pervasive and is too

complex to be solved by simple policy adjustments. Thus, continuous and in-depth

investigations are needed to address tax leakages that would lead to greater focus and

increased rigor in monitoring tax leakages and refining strategies to improve taxpayer

compliance. [6]

Research Paradigm

The figure below shows the research paradigm of the study. It suggests that the

RPT collection efficiency is measured by different factors.

INPUT PROCESS OUTPUT

LGC of 1991 Basic Principles of Collection

Sound Tax System
Checklist of 1.Fiscal Adequacy efficiency
27 2.Equality or Theoretical
municipalities Justice
3.Administrative
RPT Feasibility
Collection Revenue Generation
RPT Program
Scribbling and
Collection Interpretation of Data
Target Personal Observation

Feedback

Figure 2

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 As the paradigm shows, box 1 contains the inputs to be used in the study such as

LGC of 1991, Checklist of 27 Municipalities, RPT Collection and RPT Collection

Target. The inputs were processed by Principles of Sound Tax System, Implementation

of Revenue Generation Program, and as provided by the throughput box above. Thus,

would measure the output of this study, the Factors Affecting Collection of RPT to show

efficiency.

3. Results and Discussion

Presented on the succeding pages are the data gathered based on the theory,

model, objectives and principles cited earlier.

1. The Provincial Treasurer’s Office in the collection of RPT as decribed in terms of

The Basic Principles of Sound Tax System.

Fiscal Adequacy

Fiscal Adequacy means that the sources of revenue should be sufficient to meet the

demands of public expenditure. Taxation as a part of the country’s source of revenue,

citizens of our country should be aware on the importance of it. As the lifeblood of our

nation, taxation is very significant in making the government perform its function to

serve its people. The budget of the country comes from taxes paid by its citizens.

With regards to the organizational function, the PTO is a revenue arm manned with

knowledgeable officials and employees committed for efficient and effective

administration of provincial taxes. The office aimed to improve the financial capabilities

of the Province of Nueva Ecija for the development and growth of its constituents. Many

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strategies in the improvement of RPT collection are being utilized by the PTO. The

mandate of the PTO is a.) To advice the Governor, the Sanggunian, and other Local and

National Government concerned regarding the disposition of local government funds, and

such other matters relative to public finance; b.) To take custody and exercise proper

management of funds of the provincial government; c.) To take charge the disbursement

of all provincial government funds and such other funds the custody of which may be

entrusted to him by law or other competent authority. The provincial government of

Nueva Ecija’s responsibilities for basic services and facilities enumerated in Section 17

of the LGC are: the development of infrastructure for local use (low-cost housing, roads,

bridges, communal irrigation networks, public markets, cemeteries, elementary and high

school buildings), tourism promotion programs and investment support (micro-credit)

services, and primary health care. Provincial government exercises these functions in

coordination with national government agencies that provide policy, technical and on

occasion material support.

RPT collection is a big help to finance other services needed by the constituents of Nueva

Ecija.

Equality or Theoretical Justice

The tax system should be fair to the average taxpayer and based upon his ability

to pay.

This is the “ability to pay principle” and guided by the Principle of Adam Smith,

“good taxes meet four major criteria. They are (1) proportionate to incomes or abilities to

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pay (2) certain rather than arbitrary (3) payable at times and in ways convenient to the

taxpayers and (4) cheap to administer and collect."

The ability-to-pay approach treats government revenue and expenditures

separately. Taxes are based on taxpayers’ ability to pay.

The PTO has observed the provisions of Sections 233, 235, 236 and 250 of

Republic Act 7160 of LGC of 1991, payment of the Basic Tax on Real Property at the

rate of one percent (1%), an additional tax of one (1%) for the Special Education Fund

shall become due and payable on the first day of January. Said taxes, however, at the

discretion of the taxpayer, may be paid without interest/penalty in four (4) equal

installments on the following schedule as follows:

1st Installment – On or before March 31

2nd Installment – On or before June 30

3rd Installment – On or before September 30

4th Installment – On or before December 31

It is only one way of informing taxpayers on their ability or capacity to pay within

the year.

If the RPT has not been paid within the quarterly deadlines, then the taxpayer’s

account becomes delinquent and the tax liability increases via imposition of interest (2%

per month for a maximum of 36 months). Taxpayers are informed of their delinquency

by notices sent out by the PTO.

The following is a guide in computation of RPT:

(1) Generally speaking, the amount of tax due is usually computed by multiplying the

base, or the “value” of the object or act being taxed, against the tax rate fixed by

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 law. In RPT, the tax due is determined by multiplying the assessed value against

the RPT rate, which is 2% for cities and municipalities in Metro Manila and 1%

for provinces.

The assessed value of real property is determined by multiplying the fair market value

of the property, as described in Sec. 199 of the LGC, against the assessment level fixed

by ordinance of LGU where the property is situated. The assessment levels vary

depending on the classification of the land, whether it is residential, mineral, or

agricultural, among others, as the case may be.

The LGU may also levy 1% of the assessed value for the Special Education Fund.

(2) The taxable base of the RPT is the assessed value of the real property. In turn, the

assessed value is computed as the product of the fair market value (as determined

by the schedule of fair market values for RPT purposes) and the assessment level.

The 1991 LGC provides that the assessment levels in any particular LGU should

be legislated by its local Sanggunian and should not exceed rates prescribed

therein.

Excerpts from the Resolution No. 34 – s 2015, Provincial Ordinance No. 03 – s –

2015 re: An ordinance approving the amendments in the Revenue Code of the province of

Nueva Ecija particularly to the Sections of the Code, as follows:

Collection of Real Property Tax:

Section 2A. 56. Tax discount for Advance and Prompt Payment. – If the basic real

property tax and the additional tax accruing to special education fund are paid on time

or in advance in accordance with the prescribed schedule of payments as provided under

the Section 2A. 56, the taxpayer shall be granted a tax discount as follows:

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 a.) Ten percent (10%) discount for prompt payment, and,

b.) Twenty percent (20%) discount for advanced payment

Payment shall be considered as prompt when paid within the first quarter and

payments are considered advanced if paid before the annual tax becomes due.

Provided, however, that the above discount shall only be granted to properties

without any delinquency.

This ordinance helps in attracting taxpayers to pay their RPTs promptly or in

advance, and also a measure to collect efficiently.

Administrative Feasibility

The tax system should be capable of being properly and efficiently administered by

the government and enforced with the least inconvenience to the taxpayer.

To be effective means producing result that is wanted. What the PTO wanted is to be

efficient in the collection of RPT. How can it be attained? Some positive factors which

may contribute to the efficiency of collection of RPT are:

a. Updating of Records and Computerization of Treasury Operation

The proper implementation of RPT depends much on the record keeping of an

LGU. Assessor’s Office is supposed to have a complete listing of individual units

of the base of this tax. Prior to computerization, tax declaration records were

handwritten into ledgers or in index cards. Aside from the possibility of human

error in data recording, records were extremely easy to alter and could even be

made to disappear.

b. General Revision of Market Value

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 LGUs are required to revise Fair Market Value schedules every 3 years but this is

hardly observed and the schedules are outdated. The Sangguniang Panlalawigan

of Nueva Ecija approved last September 17, 2017 the New Schedule of Market

Value for the province of Nueva Ecija. The office will update its market value

beginning November 2017 and its effectivity or implementation is on January

2018. (Source: Assistant Provincial Assessor of Nueva Ecija)

Provincial Assessor’s Office is still in on-going process of General Revision.

c. Updating of Revenue Code every 5 years

The last time when the Revenue Code of the province had updated was on 2003.

But some amendments were done in the Revenue Code particularly in RPT

Collection.

d. Improve services to taxpayers

PTO has provided taxpayers’ lounge in which they will find overflowing water

and coffee, while waiting for the front liners to compute their taxes and issue

official receipts, and watching television while waiting or reading magazines.

Procedural Justice is important, taxpayers need to feel that the tax system is being

administered fairly and tax liabilities are not arbitrarily determined. In this regard,

public appeals to the importance of taxpaying in the citizen/state relationship can help

increase awareness and contribute to an improved tax ‘culture’, in which payment of

taxes becomes a societal norm. [8 ]

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2. The collection efficiency of Real Property Tax as described in Provincial
Treasurer’s Office

Efficiency of RPT Collection can be determined if taxpayers are paid on time since the

first day of January of every year. Some taxpayers are paid on time, some on quarterly

basis but there are taxpayers remain delinquent. Those who paid on time contribute to the

efficiency of collection.

The PTO considers the municipalities as the RPT collecting arm of the province

and their performance largely affects the collection of the entire province. It is really

important to push the small municipalities more to achieve their target RPT collection.

It is important for inputs from the municipal treasurers and to tackle the problems

that they usually encounter in RPT collection. It is in need of suggestions to address the

said problems and will come up with ways to increase the municipalities' collection

efficiency.

The treasurers shall coordinate with their municipal assessors, especially in

organizing records, and will advise them to always update their files.And shall continue

send notices to delinquent tax payers.

It shall be encouraged the municipal treasurers to double their efforts to meet, or

hopefully exceed, their targets in RPT collection every year. PTO is also very much

willing to extend help in providing assistance for the information dissemination program

of their respective municipalities.

With the support of the PTO in revenue generation program, six (6) municipalities

met 100% efficiency and even exceeded the collection target as shown in Table 1. It is

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evidence that the quality of management of these municipal treasurers is the most

influential factor in organizational efficiency. The municipal treasurers have chosen

strategic plans to implement including what are the methods and resources to be used and

also on how to lead their employees to make the most of their labor.

How to measure efficiency in the collection of RPT against the collection target set by

Bureau of Local Government Finance?

Collection Efficiency Ratio

All other factors being equal, the collection efficiency (CE) ratio is one parameter

LGUs may use to evaluate their tax administration and enforcement programs. As a

performance indicator, it compares actual collections with what is supposed to be

collected by LGUs. Previously, LGUs computed their collection efficiency (CE) by

getting the ratio of actual total collections (current and previous years’ taxes) and the

BLGF-prescribed collection targets (see Formula 1). Under this formula, the ratio could

range from zero to more than 100%.

Knowing real property tax collection efficiency allows the LGU to formulate measures

that will increase revenue collection and make RPT a major factor in LGU revenue

generation. [9]

Formula 1

CE= Actual Total Collections (Current and previous years’ taxes including penalties) x 100

Total Target Collections (As determined by BLGF)

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 Real property tax is the single most important local source of provincial and

municipal revenues. However, its income potential has not been fully exploited by local

government units (LGU). One reason for this is that revenue targets are usually set as a

fixed percentage of previous year’s collections rather than setting targets based on the

total potentially collectible taxes. Many LGUs also fail to monitor uncollected taxes

which have accumulated over time. LGUs are also unaware how much is spent for every

peso collected. LGUs in lower income classifications actually subsidize the cost of

collecting taxes, sacrificing other priority projects like basic service delivery and

infrastructure. If the situation persists, LGUs are better off not collecting real property

tax. Real property tax can make a great impact in increasing LGU revenues. Calculating

collection efficiency is the first step. Monitoring these ratios over time will give LGU

officials the necessary information on the performance of real property tax collection in

their LGUs. This information could then be used to formulate strategic and doable

measures to increase revenue collection and enable LGUs to finance more projects that

benefit the constituents.

Using the Collection Efficiency Ratio, the data in Table 1 displays the collection

target and total collection, as well as the collection efficiency of each municipality for the

year 2016.

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 Table 1. Efficiency of Collection of RPT

Municipality Target Collection CY Total Collection Collection

2016 CY 2016 Efficiency
(%)
1 Aliaga 22,371,676.31 9,841,671.34 44
2 Bongabon 26,951,409.25 984,298.26 3.66
3 Cabiao 24,304,464.77 20,439,381.61 84.10
4 Carranglan 8,066,816.96 5,550,990.14 68.82
5 Cuyapo 18,111,973.49 11,196,941.40 61.82
6 Gabaldon 13,699,355.30 4,245,667.78 31
7 Gen. Natividad 75,648,761.42 4,512,574.24 5.97
8 Gen. Tinio 33,838,114.23 8,281,439.98 24.48
9 Guimba 13,080,495.04 30,549,053.30 233.55
10 Jaen 8,013,135.86 16,074,362.80 200.60
11 Laur 20,825,207.97 2,555,798.30 12.28
12 Licab 14,978,163.18 6,398,048.26 42.72
13 Llanera 5,803,009.52 18,568,424.98 319.98
14 Lupao 14,761,705.40 8,536,293.96 57.83
15 Nampicuan 173,336,057.23 2,631,762.50 1.52
16 Pantabangan 16,992,443.36 47,119,317.28 277.30
17 Penaranda 13,347,507.26 10,687,758.48 80.08
18 Quezon 39,056,637.54 8,113,659.32 20.78
19 Rizal 26,318,289.22 9,618,990.38 36.55
20 San Antonio 23,773,000.98 12,593,035.22 52.98
21 San Isidro 20,742,942.34 12,353,253.24 59.56
22 San Leonardo 20,570,806.40 10,209,252.90 49.63
23 Sta.Rosa 15,624,147.27 16,046,116.54 102.70
24 Sto. Domingo 56,585,255.07 11,635,980.24 20.57
25 Talavera 9,457,102.36 47,740,453.82 504.81
26 Talugtug 21,070,175.66 5,796,167.84 27.51
27 Zaragoza 22,157,775.60 6,686,278.12 30.18
TOTAL 759,486,627.99 348,966,972.13 45.95
Source: Provincial Treasurer’s Office (PTO)

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Figure 2 shows the Efficiency Rate of the twenty seven (27) municipalities of Nueva
Ecija for the year 2016.

Figure 2. Efficiency Rate of Twenty Seven (27) Municipalities

The data in Table 1 displays the total scores each municipality has and the verbal

description based on Efficiency Index used in this study. As described above, only six

(6) municipalities (Talavera, Llanera, Pantabangan, Guimba, Jaen, Sta. Rosa) are

described as Most Efficient, followed by 1 municipality (Cabiao) which is Much

Efficient, another 1 municipality (Penaranda) which is described as Efficient, 5

municipalities (Carranglan, Cuyapo, Lupao, San Antonio and San Isidro) are Least

Efficient, while 13 municipalities (San Leonardo, Aliaga, Licab, Rizal, Gabaldon,,

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Zaragoza, Talugtug, Gen. Tinio, Quezon, Sto. Domingo, Laur, Gen. Natividad, Bongabon

and Nampicuan} are described as Inefficient.

As indicated in Table 1 and Figure 2, these show that the highest score was

achieved by Talavera, Llanera, Pantabangan, Guimba, Jaen and Sta.Rosa.

Based on this efficiency record for the year 2016 of the 27 municipalities, the

Provincial Treasurer’s Office has exerted more effort in the implementation of Revenue

Generation Program to increase collection on Real Property Tax for the year 2017. The

following are the strategies/activities created:

1. Conduct Tax Collection Enforcement Program

1.1. Installation of Billboards/Posters/Tarpaulins/streamers on conspicous places

1.2. Utilize Tri-Media

1.3. Conduct Tax Caravan

1.4. Attend Barangay Meetings/Talakayan sa Barangay

. 1.5 Assignment of Collection Targets to Municipal Treasury Office

1.6. House to House Campaign.

1.7 Evaluation of Municipal Treasury Offices

2. Apply Remedial Measures

2.1 Send Notice of Delinquency

Employing the help of barangay officials was an effective means of distributing

notices of delinquency. Barangay officials have an intimate knowledge of their

communities. In contrast, if the postal system is used to distribute notices, taxpayers can

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just avoid the notices by pretending that the person named in the notice does not reside

there or is unknown to them.

2.2 Public Auction

LGUs hold public auctions of delinquent property. According to several

Municipal Treasurers, the most effective combination was to hold a public auction

immediately before and/or after the end of an amnesty period.

Due to massive Tax Campaign during the first and second quarter of the current

year, the result is presented in Table 2.

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 Table 2
COMPARATIVE STATISTICS ON RPT COLLECTIONS
CUMMULATIVE (BASIC & SEF COMBINED)
THE MONTH JANUARY-JUNE 2017

TOTAL COLLECTION INCREASE OR RATE(%

MUNICIPALITIES (DECREASE) ) OF
2016 2017
1 Aliaga 4,461,999.98 12,505,623.74 8,043,623.76 180.27
2 Bongabon 3,415,333.52 9,066,663.40 5,651,329.88 165.47
3 Cabiao 6,741,065.80 7,065,125.42 324,059.62 4.81
4. Carranglan 2,221,850.62 2,762,622.36 540,771.74 24.34
5 Cuyapo 9,026,687.92 5,630,758.26 (3,395,929.66 (37.62)
6 Gabaldon 1,869,674.48 1,410,125.98 (459,548.50) 24.58)
7 Guimba 9,314,756.94 15,583,988.92 6,269,231.98 67.30
8 Jaen 8,957,796.72 11,156,700.48 2,198,903.76 24.55
9 Laur 1,841,695.96 2,617,877.54 776,181.58 42.14
10 Licab 1,575,982.38 931,578.00 (644,404.38) (40.89)
11 Llanera 5,304,797.38 12,218,829.74 6,914,032.36 130.34
12 Lupao 2,101,489.28 2,736,444.38 634,955.10 30.21
13 Nampicuan 568,082.44 1,196,691.56 628,609.12 110.65
14 Natividad 5,029,912.68 4,383,215.22 (646,697.46) (12.86)
15 Pantabangan 544,082.62 2,232,367.18 1,688,284.56 310.30
16 Penaranda 3,859,300.32 7,620,995.57 3,761,695.25 97.47
17 Quezon 2,703,672.92 3,060,113.70 356,440.78 13.18
18 Rizal 6,860,671.60 5,365,622.78 (1,495,048.82) 21.79
19 San Antonio 8,044,650.84 8,329,845.86 285,195.02 3.55
20 San Isidro 7,128,757.98 12,941,189.52 5,812,431.54 81.53
21 San Leonardo 8,430,292.94 7,607,718.42 (822,574.52) (9.76)
22 Sta. Rosa 9,630,542.70 9,032,031.34 (598,511.36) (6.21)
23 Sto. Domingo 5,121,419.04 9,165,714.12 4,044,295.08 78.97
24 Talavera 21,785,167.24 38,304,084.36 16,518,917.12 75.83
25 Talugtug 1,808,031.78 3,849,646.44 2,041,614.66 112.92
26 Tinio, Gen. 2,840,062.88 3,569,776.36 729,713.48 25.69
27 Zaragoza 5,634,977.88 10,582,705.88 4,947,728.00 87.80
TOTAL 146,822,756.84 210,928,056.53 64,105,299.69 43.66
Source: Provincial Treasurer’s Office

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Figure 3. Efficiency Rate on Comparative Statistics of RPT Collection, the month
January – June 2017

3. Problems/Challenges met in the collection of RPT taxes

There is a rich literature on tax evasion that identifies many factors that abet or

deter from tax compliance. The probability of evasion is strengthened by the belief that it

can be done and is generally practiced. To the extent that taxpayers perceive it possible to

achieve evasion, the motivation to commit tax evasion is strengthened. If such is the case,

then a notice of delinquency may lead a taxpayer to consider evasion as the route of

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choice before she/he even considers simply complying with a tax obligation. Increases in

tax liability, administrative requirements and heavy handed enforcement were also found

to have a negative relationship to tax compliance. The last amnesty program of the

province was in 2006. Some municipal treasurers believe that amnesties help in

collection especially during economic downturns. But, they added, when tax collection is

good, there is no reason for a tax amnesty.

Several officials discussed the problems they had encountered in trying to auction

off property. First, the law requires LGUs to ensure that they have proof of 3 notices sent

to the taxpayer. Otherwise, the 1- year period of delinquency, after which the LGU can

auction a property, is temporarily suspended. But there are many instances when it is very

difficult to locate the owners, until of course, they seek to stop the auction by filing for a

restraining order with the courts. To avoid legal problems employees have to make sure

that they follow the rules very carefully.

Conclusion

Organizational efficiency is the organization's degree of success in using the least

possible inputs in order to produce the highest possible outputs. Resources include both

concrete items such as cash and more abstract concepts such as human capital. Factors

that influence the efficiency of the organization's use of its resources can be both internal

and external to the organization. Quality of management is perhaps the most influential

factor on organizational efficiency since it is management that chooses how to implement

strategic plans -- including selecting what methods and resources to use, and leading

employees in order to make the most of their labor.

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Recommendation

Based on the findings of this study, the following recommendations have been

drawn:

1. Efficient implementation of strategies on how to collect taxes to meet the target

collection.

2. Collection of delinquent taxes by sending notice of delinquency and ask barangay

officials for partnership in the delivery of the said notices.

3. Combining the use of amnesties and auctions is one effective way to collect taxes. The

use of carrot-and-stick tactics, where one is given the opportunity to reduce or pay the

arrears or suffer the consequences.

4. The PTO considers the municipalities as the RPT collecting arm of the province and it

is important to push the small municipalities more to achieve their target RPT collection.

5. Computerization of the PTO and ensure that the data entered is accurate and complete.

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References:

[1] Gomez, Maita (2010) The Failure of the Real Property Tax in Local

Governments

[2] Republic Act 7160, “The local government code of the Philippines,” 1991.

[3] Li, A. (2017). What Is the Organizational-Efficiency Factor? What Is the

Organizational-Efficiency Factor? Available from http://smallbusiness.chron.com/

[4] Ecological Profile of Nueva Ecija, series of 2016

[5] Smith, Adam 1776, Theories of Taxation

[6] Vicente, F. (2017) Philippine Tax Leakages: An Assessment Available from

http://pdf.usaid.gov/pdf_docs/PNADH572.pdf

[7] Available from http://www.justhomeworks.com/2013/07/basic-principles-of-

sound-tax-system.html

[8] Gayer, Christian and Mourre, Gilles (2012) Property Taxation and Enhanced Tax

Administration in Challenging Times

[9] (Calculating the Collection Efficiency and Cost to Collection Ratio Local Finance

IMPROVING REAL PROPERTY TAX SYSTEM PERFORMANCE

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