Finance Secretary Carlos G. Dominguez III and Interior Secretary Eduardo M. Año signed a joint circular ordering local government units (LGUs) to follow a set of standards fees on regulatory fees and other service charges.
The issuance of Joint Memorandum Circular (JMC) 2019-01 aims to ensure that LGU fees do not unduly burden the public but are imposed only to help local governments recover the costs of services they render while making them more business-friendly. The Departments of Finance (DOF) and Interior and Local Government (DILG) said the circular is in compliance with Republic Act (RA) 11032 and as provided under the Local Government Code.
The JMC applies to all fees and charges imposed by LGUs rendering services to the public, including: business permits, mayor’s permits and barangay clearances, toll fees and billboard fees, among others.
“In order to help LGUs build strong enabling environment for good local governance and serve our constituents fairly, particularly the business sector, we enjoin all LGUs to review, adjust and/or revise their local revenue ordinances in accordance with the rationalized procedure for setting fees and charges,” the JMC said.
Under the circular, the DOF through the Bureau of Local Government Finance (BLGF), will issue a local fees and charges (LFC) tool kit, which comprises the direct fixed cost and variable costs of rendering services.
Direct fixed cost includes depreciation of equipment and utilities, such as electricity and water use, while variable costs include salaries of personnel, cost of supplies and materials.
According to the circular, LGUs have the option to adjust the fees they impose but these should conform to the variables in the LFC tool kit, which will be used in computing the rates and should, as much as possible, applied uniform for similar or comparable services and functions offered by other LGUs.
“The revised rates shall be imposed through the issuance of an appropriate ordinance and compliance to all legal requirements including the conduct of a public hearing and publications,” the circular added.
In coordination with the DILG, the BLGF and the Philippine Tax Academy (PTA) will conduct the training and provide technical assistance programs for LGU personnel to help them review and set reasonable regulatory fees and charges by using the LFC tool kit.
Every local chief executive is advised to issue an executive order creating an oversight committee on the revision of fees and charges, which will review, gather data and compute the appropriate rates based on the BLGF guidelines in the LFC tool kit.
The BLGF will regularly monitor the fees and charges imposed by LGUs through the DOF-BLGF online portal, and ensure that the schedule of rates and their analysis are regularly published online and readily available to anyone.