LGU Generated Revenue Reached P169B In Q2, IRA Dependence Remains High

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Revenues generated by local government units (LGUs) in the second quarter increased 5% from the previous year to 168.96 billion pesos, leaving their share of national government revenues as their main source of income, said the Ministry of Finance (DoF).

Citing data from the Bureau of Local Government Finance (BLGF), the DoF said in a statement over the weekend that provincial, municipal and municipal revenues generated locally had increased 36% quarter-on-quarter.

Second quarter collections represented 37% of their total operating income of P273.21 billion, up from 35% a year earlier.

Local taxes on businesses and real estate increased 4% year-on-year to 135.07 billion pesos, accounting for 80% of LGU’s locally sourced income.

Revenue generated by non-tax measures increased 6.4% to 33.88 billion pesos.

Income from other sources declined, including transfers from the national government, which fell 57.5 percent year-on-year to 18.69 billion pesos due to the high base the previous year.

At the height of the pandemic last year, the national government released one-time financial assistance to LGUs equivalent to one month of their Internal Income Allowance (IRA) to help them and their constituents cope with the crisis. . The IRA is a legally mandated 40% share to which LGUs are entitled from national government tax revenue.

IRA continued to dominate LGU’s revenue streams, accounting for 59% of their overall revenue in the second quarter, up from 55% in 2020.

The IRA reached 273.21 billion pesos between April and June, up 8% from the previous year.

BLGF executive director Niño Raymond B. Alvina said provinces were the most dependent on IRA at 79% in the second quarter, followed by municipalities at 75% and cities at 38%.

“Based on the performance targets set by this office for local treasurers for fiscal year 2021, local revenues for provinces, cities and municipalities in the second quarter of fiscal year 2021 already represent 74% of the fundraising target. annual value of 223.89 billion pesos, ”Mr. Alvina said.

LGUs achieved 80% of their annual target for local business taxes and 75% for property taxes.

Revenues from royalties and fees grew 74% in the second quarter while revenues from economic enterprises represented 47% of the target.

He said 22% of the 375 LGUs reported a drop in locally sourced income in the second quarter, including 29 provinces, 56 cities and 290 municipalities.

The National Capital Region (RCN) leads the collection tables with 72.34 billion pesos, or 43% of the total.

Then come region IV-A or Cavite-Laguna-Batangas-Rizal-Quezon (Calabarzon) which collected 26.14 billion pesos in the second quarter (16% of the total) and region III or central Luzon with 15.54 billion of pesos (9%).

When the Mandanas Supreme Court ruling takes effect next year, LGUs will also receive 40% of customs revenue. The 1991 Local Government Code defined IRA as 40% of national government internal revenue, which the national government used as a basis for denying LGUs access to customs levies. The Supreme Court has since invalidated this interpretation and removed the distinction between domestic revenue and customs collections for the purposes of calculating the IRA pot.

LGUs are set to receive 959.04 billion pesos in national taxes next year. The provinces and cities will each receive 220.58 billion pesos, the municipalities will receive 326.07 billion pesos and the barangays 191.81 billion pesos.

A proposed measure to improve LGU property valuation systems, which is part of the government’s overall tax reform program, is currently pending in Congress. The reforms are expected to strengthen the capacity of LGUs to generate their own income. – Beatrice M. Laforga


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