Exploring the Potential of Land Value Capture for Funding COVID-19 Crisis Management

Land value capture (LVC), which harnesses values from land value increments due to public investments, is worth exploring in the Philippines now that it is embarking on huge infrastructure projects. While the legal foundations for LVC have been in place in the country for a long time, this land-based financing mechanism remains largely unexplored and untapped in financing public benefits. This research examines the potential of LVC for funding government programs. It is a qualitative case study in the Antipolo Station, one of the two newest stations of the Light Rail Transit (LRT)-2 in the Philippines. Its main objective is to examine, explore, and explain the extent to which land value increments taking place near the Antipolo Station are captured. It attempts to identify the opportunities and explain the challenges in using LVC for funding COVID-19 response in Antipolo City. The research data collection methods used were purposive semi-structured interviews and secondary data analysis. The findings show that land value increments taking place near the Antipolo Station are captured by the City Government of Antipolo through real property tax (RPT) and the additional levies on real property. The existing legal frameworks, however, do not optimize the use of real property taxation Antipolo City. Properties are under-assessed and undertaxed because of the built-in limitations of the provisions on real property taxation, particularly on the levels of assessments, rates of taxes, and the frequency of updating the Schedule of Fair Market Values (SFMV). Further, under-utilization of the tax is due to challenges in the social acceptability of increasing RPT rates, transparency in the declaration of property values, and the administrative and technical requirements in collecting the tax As for its use to fund COVID-19 crisis management, limits are also set by the law. LGCs must abide by the rules on the use of the General Fund, to which the proceeds of real property taxes and other revenues that are not earmarked for specific purposes go. Real property tax, or a portion of it, can be reserved specifically for COVID-19 crisis management, only if there is an enabling law on earmarking it. This thesis ends with recommendations to address issues surrounding LVC in Antipolo City and the Philippines as well as suggestions for further research.