Manila: Senator Panfilo Lacson has introduced Senate Bill 405, mandating the allocation of 1 percent of total Value-Added Tax (VAT) collections to fund local development projects aimed at motivating local government units (LGUs) to enhance their tax collection efficiency.
According to Philippines News Agency, the bill aims to incentivize LGUs that consistently meet their revenue collection targets and make significant contributions to the national treasury. Lacson emphasized that these incentives would encourage LGUs to streamline business operations and lower obstacles for small business owners, further boosting their tax collection efforts.
Lacson highlighted the importance of empowering LGUs to actively participate in national development, which would help dismantle the culture of dependency and political patronage that persists in the system. He expressed hope that this initiative would contribute to achieving the inclusive growth desired by Filipinos.
The Philippines comprises 82 provinces, 146 cities, and 1,487 municipalities. Under the bill, which was filed on July 9, a special fund known as the 'Local Government Development Fund (LGDF)' would be allocated to LGUs demonstrating tax collection efficiency, thus supporting economic growth.
The LGDF would be accessible exclusively to LGUs that achieve at least a 10 percent increase in their VAT collection in the fiscal year preceding the release of the LGDF, as certified by the Bureau of Local Government Finance and validated by the Department of Finance. Lacson stated that the LGDF should be used solely for developmental projects, activities, and programs based on each LGU's approved Comprehensive Development Plans.
The proposed measure also includes a capacity-building mechanism to ensure LGUs can effectively utilize the LGDFs. This mechanism aims to enhance local governance, improve public service delivery, and strengthen accountability among local governments.
Additionally, the bill proposes a web-based monitoring system for programs funded by the LGDF, with an initial PHP100 million allocation for the system. It seeks to institutionalize the rational and equitable management of resources for LGU development, fostering a fiscal environment that promotes self-sufficiency and independence.
