An administration lawmaker has sought to grant additional tax relief to victims of calamities in the form of real property tax moratorium in the affected areas for two fiscal years from the date of declaration of a state of calamity by the proper local sanggunian.
In filing House Bill 5827, Bohol Rep. Arthur Yap said his proposal aims to ease the sufferings of the victims of calamities by granting them a reasonable relief from their tax liabilities on their real properties affected by the calamity within a specified period of time to accelerate their pace of economic recovery.
Under current tax laws, Yap explained that relief for losses as a result of calamities is granted only to individuals or corporations engaged in trade or business or practice of profession.
“Losses of property used in trade or business, resulting from fires, storms or other casualties, that are actually sustained during the taxable year and not compensated for by insurance or other forms of indemnity can be claimed as deductions for income tax purposes. The amount of the deductible casualty loss is limited to the difference between the value of the property immediately preceding the casualty and its value thereafter,” Yap, chair of the House committee on reforestation, said.
Yap said while the government depends upon taxation to serve the people for whose benefit taxes are collected, it must also be sensitive to the needs of victims of natural calamities and assist in the alleviation of their serious economic dislocations.
HB 5827, or the proposed “Calamity Tax Relief Act of 2015,” acknowledges the State policy to assist taxpayers in areas affected by natural calamities, through tax relief, to reasonably recover from the financial burden caused upon them by such natural disasters.
In such cases of severe suffering of the people, there is a need to balance the government’s primordial need for funds and the people’s right to life, liberty and property according to the measure.
Likewise, the bill provides it shall also be the State policy to provide tax exemption to donations and assistance given to victims of calamities in order to encourage donors and for the maximum utilization of the donations extended.
The bill, now pending at the House Committee on Ways and Means, defines calamity as a state of extreme distress or misfortune, produced by some adverse circumstance or event cause by natural forces such as, but not limited to, typhoons, earthquakes, volcanic eruptions or similar natural disasters.
The measure provides that a declaration of a state of calamity by the proper local sanggunian shall make effective certain tax reliefs. One of these is that the real property tax in the affected area shall not be assessed and collected for two fiscal years, starting from the date of declaration of a state of calamity.
The real property shall refer only to residential lands and buildings, commercial and industrial buildings, agricultural lands together with the plants and growing fruit trees thereon, and permanently installed machineries intended by the owners of the buildings or structures for an industry or business which may be carried on therein.
The other proposed tax relief is that any donation in the name of any organization that declares that the funds donated shall be in favor of the calamity victims shall be exempt from donor’s tax.
Moreover, such donation shall be certified by the Department of Social Welfare and Development (DSWD) and that no more than 10 percent of said donation shall be used by the donee organization for administration purposes.
The Commissioner of the Bureau of Internal Revenue (BIR) shall, within 30 days from the effectivity of the Act, promulgate the rules and regulations for its implementation, the bill provides.