Impact of revenue from real property tax on industrialization and urbanization levels in Philippine province: an analysis
Date
2011-10
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Abstract
In 2007, Revenue from Real Property Tax collections account for the majority of tax revenue, surpassing that from; business, income, and other taxes. Due to the passing of the Local Government code of 1991, the power to collect real property taxes was given to local government units especially to provinces and cities. This study aims to develop the idea that the revenue derived from real property taxes determines a province's level of industrialization and urbanization. The study aims to (i) identify the link between Urbanization and Industrialization, (ii) define factors which are present in Philippine provinces, (iii) and finally determine the significance of real property tax revenue to both. The paper proceeds with an analysis with regards to both industrialization and urbanization. Ordinary Least Squares (OLS) estimation was performed for both industrialization and urbanization models using 2007 data. Findings show that industrialization occurs before urbanization as urban areas undergo economic growth before people choose to migrate to these localities. Meanwhile, the revenue from real property taxes serves as an agent for both, as it reflects property values in a given province. It also functions as a signaling mechanism in determining industrialization levels as property values increase with industrialization.
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Keywords
Industrialization, Urbanization, Real Property Tax Revenue