Lacson's Bill Aims to Boost Local Tax Collection, Incentivize Local Development Projects

Strategic Insights -

Senator Panfilo Lacson has filed a bill that aims to encourage local government units (LGUs) to improve their tax collection by allocating 1 percent of total Value-Added Tax (VAT) collections to fund local development projects. The proposed measure seeks to incentivize LGUs that consistently achieve their revenue collection targets and contribute to the national coffers. According to Lacson, the bill aims to dismantle the culture of mendicancy and political patronage, and promote inclusive growth by empowering LGUs to be active participants in the country's development.

Key Takeaways:

  • The bill mandates the allocation of 1 percent of total VAT collections to fund local development projects through the Local Government Development Fund (LGDF).
  • LGUs that have proven tax collection efficiency and attained an increase of at least 10 percent in their VAT collection in the preceding fiscal year are eligible to receive the LGDF.
  • The LGDF shall be used solely for developmental projects, activities, and programs (PAPs) based on the LGUs' approved Comprehensive Development Plans.
  • A capacity-building mechanism will be established to enhance local governance, improve public services, and strengthen accountability among local governments.
  • An initial PHP100 million funding will be allocated for a web-based monitoring system for programs to be funded by the LGDF.
  • The proposed measure aims to institutionalize rational and equitable management of resources for LGU development while fostering a fiscal environment that promotes self-sufficiency and independence.

Statistics:

  • 82 provinces, 146 cities, and 1,487 municipalities in the country will be eligible for the LGDF.
  • The LGDF shall be allocated to LGUs that have attained an increase of at least 10 percent in their VAT collection in the preceding fiscal year.
  • PHP100 million initial funding will be allocated for the web-based monitoring system.

Sources:

  • Senate of the Philippines News Release (July 9)
  • Lacson, P. (2022). Senate Bill 405.