MANILA – Senator Panfilo Lacson has filed Senate Bill 405, which mandates the allocation of 1 percent of total Value-Added Tax (VAT) collections to fund local development projects that could motivate local government units (LGUs) to improve their tax collection.
“This bill intends to incentivize local government units that consistently achieve their revenue collection targets and substantially contribute to the national coffers,” Lacson said in a news release on Friday.
Such incentives, he said, would motivate LGUs to facilitate business operations and reduce barriers for small entrepreneurs, further enhancing their tax collection.
“Giving the LGUs the necessary wherewithal to be active participants in the development of our country will contribute to dismantling the culture of mendicancy and political patronage that viciously thrive in our system. Ultimately, this will help in the realization of the elusive inclusive growth that the Filipinos all aspire for as a nation,” he added.
There are 82 provinces, 146 cities, and 1,487 municipalities in the country.
Under the bill, filed on July 9, a special fund known as the “Local Government Development Fund (LGDF)” will be allocated to LGUs that have proven tax collection efficiency, thus contributing to the growth of the economy.
The LGDF shall be made available exclusively to LGUs that attained an increase of at least 10 percent in their VAT collection in the immediately preceding fiscal year of the release of the LGDF, as certified by the Bureau of Local Government Finance and validated by the Department of Finance.
“To ensure meaningful alignment of funds that is reflective of the needs of the communities, the LGDF shall be used solely for developmental projects, activities, and programs (PAPs) based on the LGUs’ approved Comprehensive Development Plans,” Lacson said.
The proposed measure also provides for a capacity-building mechanism to ensure LGUs can properly use the LGDFs.
Such a mechanism, he said, would “enhance local governance, improve the delivery of public services, and strengthen accountability among local governments.”
The bill also provides for a web-based monitoring system for programs to be funded by the LGDF. An initial PHP100 million funding will be allocated for the monitoring system.
It also seeks to institutionalize “rational and equitable management of resources for LGU development while allowing for a fiscal environment that fosters self-sufficiency and independence,” Lacson said. (Leonel Abasola/PNA)