56 provinces fail to develop local revenue base – DOF

MANILA, Philippines - A majority of provinces remain heavily dependent on the national government for funding, failing to contribute to nation building, the latest Tax Watch Ad of the Department of Finance (DOF) said.

Fifty-six out of 80 provinces, or seven in every 10 provinces, have not yet fully developed their local revenue base as allocations from the government continue to account for the bulk of their regular income.

Under Section 3 of Republic Act 7160, or the Local Government Code, local government units (LGUs) “have the power to create and broaden their own sources of revenue and the right to a just share in national taxes and an equitable share in the proceeds of the utilization and development of the national wealth within their respective areas.”

To be effective in nation building, LGUs are given powers by the Local Government Code to generate local income to fund basic social services.

“However, after more than 20 years of fiscal centralization, locally sourced income still shares very little to the annual regular income of provinces. The rest of the regular income are mandatory shares from the Internal Revenue Allotment and other national government revenues,” the DOF said in a newspaper advertisement.

The average net share of local income to total regular income of provinces was 15 percent as of the end-2013, it added.

The province of Sulu had the lowest share of locally sourced income (LSI) of a province, amounting to only P1.04 million out of its total regular income of P700.61 million.

On the other hand, Aklan, with the famous Boracay Island, has the highest contribution at 45 percent with an LSI of P491.75 million out of total earnings of P1.09 billion.

Other provinces with the least LSI are Maguindanao, Western Samar, Tawi-Tawi, Basilan, Surigao del Sur, Sarangani, Sultan Kudarat, Camarines Sur and Lanao del Sur.

Bataan, Southern Leyte, Rizal, Tarlac, Pampanga, La Union, Benguet, Bulacan and Batangas are the other provinces that posted significant income gains.

“When LGUs collect low revenues, they fail to maximize their own revenue generation capacity to spend on basic services for their people,” the DOF said.

“Local autonomy can be better served if LGUs become self-reliant communities,” it added.