MANILA, Philippines - While local government responsibilities have increased, revenue sources have not kept pace as several cities continue to ask for funding from the government instead of relying on income they generated on their own.
Revenue sources at the local level consist mainly of locally sourced income – funds raised strictly from local authorizations and taxes and fees – and state government transfers or inter-governmental aid.
According to the government’s latest TaxWatch campaign, 74 of the country’s 144 cities failed to “fully realize their local revenue potential” as locally sourced income accounts for less than a third of their total annual earnings.
“Among local governments, cities have the most taxing powers to generate local income to fund the basic social services. But most cities with more than 10 years of cityhood still rely less on their locally sourced income,” the Department of Finance (DOF) said.
“Like most provinces, the mandatory shares from the Internal Revenue Allotment and other national government revenues make up the most of their regular income,” the DOF added.
Data culled by the Bureau of Local Government Finance show that the average net share of local income to regular income among cities was 30 percent last year.
Makati City had the highest revenue collection making up 92.6 percent of the central business district’s total earnings in 2013. Out of its P9.5-billion annual income, P8.83 billion came from its own collection efforts.
Pasig City came in next with its locally sourced income accounting for 85.5 percent of its total earnings of P5.77 billion.
Pasay City ranked third less dependent on state support with its locally sourced income making up 82.5 percent of total earnings of P3.03 billion.
Completing the top five cities less dependent on government funding are Mandaluyong (81.9 percent out of P2.59-billion total income), and San Juan (76 percent out of total earnings of P1.02 billion)
Guihulngan City in Negros Oriental, meanwhile, ranked lowest in tax collection efforts with a mere 3.1 percent.
On the hand, Sipalay City in Negros Occidental ranked at the bottom among mature cities with income sourced from taxes comprising only 3.5 percent.
“When LGUs (local government units) 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.