Over half of Philippine cities post revenues below nat'l average

MANILA, Philippines - More than half of Philippine cities are generating revenues below the national average as more local government units (LGUs) become dependent to National Government (NG) earnings for funding, separate data showed.

According to the Department of Finance, 52 percent or 75 out of 144 cities have collected revenues accounting for less than 30 percent of their total annual regular income.

This means bulk of them are sustaining operations through the internal revenue allotment (IRA), which is their share of NG revenues. By law, 40 percent of internal revenues are given to LGUs.

"Cities have the most taxing powers allowed by law due to the services required of them to be delivered to the people," DOF said on its latest Tax Watch released on Wednesday.

"Local autonomy is more meaningful if LGUs become self-reliant communities," it added.

Since 2010, the DOF has been batting for LGUs to shore up their coffers by reviewing, among others, zonal valuations for real property taxes, transaction fees and charges and improving tax collection efficiency.

The agency has said it wanted LGUs to generate their own income to help sustain the country's fiscal health.

But in a statement on Wednesday, the Department of Budget and Management (DBM) even highlighted the increasing IRA allotments, which have risen by 62 percent under the Aquino administration.

According to DBM data, total IRA under this year's P3.002-trillion budget amounts to P428.6 billion, a tenth more than last year and significantly up from P265.8 billion in 2010.

As proportion of NG budget however, IRA has been declining from a ratio of 17.25 percent in 2010, 17.44 percent in 2011, 15.05 percent in 2012, 15.07 percent in 2013, 15.08 percent in 2014, 14.96 percent last year, and 14.28 percent this year.

"Efficient tax collection and our policy of building the capacity of LGUs to serve as partners of the (NG) in the implementation of projects have made this possible," Budget Secretary Florencio Abad was quoted as saying.

"This means more gains in terms of infrastructure build-up and social services in local communities," he added.

A total of 43,593 LGUs would benefit from this year's IRA. The number of previous years' beneficiaries were not readily available.

By law, IRA is automatically released to LGUs by the government and may not be held back for any reason, except in extreme case of unmanageable public deficit. As of November last year, the budget gap of P46.5 billion was only around 16 percent of the P283.7-billion cap.

According to the DOF, the 20 cities at the bottom in terms of generated revenues as a proportion of annual income include Tandag City (9.2 percent), Malaybalay City (9 percent), Escalante City (8.7 percent), Calbayog City (8.3 percent), Canlaon City (7.9 percent), Baybay City (7.8 percent), Bayugan City (7.2 percent), Cadiz City (7.2 percent), Tanjay City (6.4 percent) and Palayan City (6 percent).

Also in the list were Isabela City in Basilan (5.8 percent), Borongan City (5.8 percent), Tabuk City (5.6 percent), Bayawan City (5 percent), Lamitan City (4.8 percent), Dapitan City (4.7 percent), Himamaylan City (4.1 percent), Guihulngan City (3.2 percent), Sipalay City (3 percent) and Marawi City (1 percent).