Scrapping Real Property Taxes.

The Case for Scrapping Real Property Taxes on Fully Owned, Unencumbered Property

I am putting forward the proposition that properties fully owned and paid for should be exempt from paying annual real property taxes.

A home or land that has been fully paid for should not be subject to perpetual taxation, because true ownership cannot exist where the State collects rent forever and retains the power to confiscate what it did not build, buy, or earn.

Below is a structured, principled argument for scrapping Real Property Taxes (RPT) on fully owned, unencumbered property. It's framed in a way that resonates with constitutional principles, property rights, social justice, and economic efficiency.

1. Real Property Tax Converts Ownership into Perpetual Rent to the State

True ownership means permanent, secure, and unconditional control of property. Real Property Tax undermines this by:

Imposing an annual payment obligation indefinitely, even after full purchase and transfer

Allowing the State to seize property through tax delinquency, despite the owner having paid all acquisition taxes

In effect, RPT transforms private ownership into a form of state tenancy, where failure to pay annual dues can nullify lifetime ownership. 

This contradicts the fundamental meaning of “ownership” in civil law.

2. Double and Triple Taxation of the Same Asset

Property is already heavily taxed at multiple stages:

* Income tax on earnings used to acquire the property

* Value-Added Tax (VAT) or other indirect taxes on materials and services

* Capital gains tax, 

* documentary stamp tax, and transfer taxes upon acquisition

Imposing RPT thereafter constitutes recurrent taxation on already-taxed wealth, violating the principle of tax equity and proportionality.

3. RPT Punishes the Elderly, the Poor, and the Asset-Rich but Cash-Poor

RPT disproportionately harms:

* Retirees on fixed incomes

* Heirs who inherit land but lack liquidity

* Rural families whose land has appreciated due to urban expansion—not productivity

* A person may be land-rich but income-poor, yet RPT forces liquidation or loss of ancestral property. This is socially unjust and accelerates land consolidation by elites and corporations.

4. Government Should Tax Economic Activity, Not Mere Possession

Sound taxation policy focuses on:

- Income

- Consumption

- Profits

- Productive use of assets

Taxing passive ownership—especially when no income is derived—discourages stability and savings, and penalizes prudence. 

Property that is:

- Fully paid

- Not mortgaged

- Not income-generating

…should not be treated as a continuing revenue source for government.

5. Local Government Dependence on RPT Encourages Inefficiency

RPT has become an easy, lazy revenue source for local governments:

- Collected regardless of service quality

- Unrelated to economic performance or governance outcomes

- Often poorly linked to actual property services

This weakens incentives for LGUs to:

* Promote enterprise

* Attract investment

* Improve local economic activity

Abolishing RPT on fully owned property forces LGUs to shift toward performance-based and growth-oriented revenue models.

6. Ownership Without Security Is Not Ownership at All

If government can confiscate property due to unpaid annual taxes—even after full legal acquisition—then:

* Property rights are conditional

* Ownership is revocable

* The State remains the ultimate owner in practice

This contradicts constitutional protections of private property and due process, and undermines long-term national stability.

7. International and Historical Perspective

Historically, perpetual land taxes were:

- Instruments of feudal control

- Tools of colonial extraction

- Means of social hierarchy preservation

Modern democratic societies should move toward taxing use and gain, not existence and possession.

Proposed Policy Alternative (Balanced Approach)

Rather than abolishing all property taxation indiscriminately, adopt a tiered reform:

Exempt from RPT:

* Fully owned residential property

* Ancestral land

* Single family homes below a defined area/value threshold

Retain RPT for:

* Income-generating properties (commercial, rental, industrial)

* Speculative land banking

* Vacant urban land deliberately withheld from productive use

Replace Lost LGU Revenue With:

- Local consumption taxes

- Environmental impact fees

- Tourism and business activity levies

- Revenue-sharing from national taxes tied to performance