THE Department of Finance (DOF) has released the fiscal performance rating of local government units (LGUs) for 2012, indicating that most have not improved their tax-collection activities and rely heavily on the internal revenue allotment (IRA) for funding.
According to the DOF’s Bureau of Local Government Finance (BLGF), LGUs throughout the Philippines collected only P84.57 billion in 2012 from locally sourced income such as real-property taxes, business taxes, regulatory fees, tolls and others.
The low-collection performance translates to very high dependence on the IRA, best shown by IRA funds as percent of their annual regular income.
IRA represents the 40 percent share of LGUs in the national internal revenue tax collection and based on collections in the third fiscal year preceding the current fiscal year. In 2012 the IRA earmarked for LGUs was P273.31 billion.
Even in cities, for instance, 39 cities in 2012 were reported to have a “very high” dependence on IRA, with their IRA constituting more than 80 percent of their total annual regular income. Eighteen cities were considered as having a “high” dependence of IRA, with their IRA constituting more than 70 percent of their total annual regular income.
Only 14 cities were found to have “very low” dependence on the IRA, or which have their IRA as less than 50 percent of their total annual regular income. Total annual regular income refers to the locally sourced income, less nonrecurring income such as income derived from the sale of properties.
Finance Secretary Cesar V. Purisima said the DOF will closely monitor the fiscal position of LGUs, and will push for more efficient tax collection by the LGUs and the updating of local revenue codes and schedules of market values of real properties to increase the tax collection.
In the case of municipalities, 70 percent of municipalities have poor collections in real-property taxes, which constitute only 15 percent of their total income. On average, only 57 percent of collectible real-property taxes are realized by provinces and cities.
Add this to the non-compliance of 60 out of 81 provinces, which have not updated their schedule of market values which are used as basis for imposing real-property tax.
“We are closely monitoring the LGUs through their local treasurers and assessors. We want to drive LGU revenue-generation performance knowing full well that optimized capacity means having more funds to serve their constituents,” Purisima said.