Proposed Law Aims to Boost Local Government Development

Strategic Insights -

Aiming to boost local government development, Sen. Panfilo 'Ping' Lacson has filed Senate Bill No. 405, which allocates one percent of VAT revenues to support local government units' (LGUs) development projects. The bill incentivizes LGUs to improve their VAT collection performance, providing motivation for them to facilitate business operations and reduce barriers for small entrepreneurs. The proposed measure also introduces capacity-building mechanisms to enhance frameworks of local governance and ensures transparency and accountability through a web-based monitoring system.

Key Takeaways:

  • Senate Bill No. 405 aims to allocate one percent of VAT revenues to support local government units' (LGUs) development projects.
  • The bill incentivizes LGUs to record at least a 10-percent increase in their VAT collection performance compared to the previous fiscal year.
  • The incentives will be provided through a special Local Government Development Fund (LGDF), sourced from one percent of the total actual VAT collections for fiscal year 2022.
  • The LGDF will be used to support development projects in LGUs that meet the VAT collection performance requirement.
  • The bill tasks the Bureau of Local Government Finance and the Department of Finance with verifying the LGUs' VAT collection performance.
  • The Department of Budget and Management will distribute the incentive to the LGUs through the LGDF.
  • A capacity-building mechanism will be introduced to enhance frameworks of local governance, including the delivery of public service and fiscal accountability.
  • A P100 million allocation will be made to develop a web-based monitoring system for LDFG-funded projects to ensure transparency and accountability.

Statistics:

  • One percent of VAT revenues will be allocated to support local government units' (LGUs) development projects.
  • The LGDF will be sourced from one percent of the total actual VAT collections for fiscal year 2022.
  • A 10-percent increase in VAT collection performance is required from LGUs to be eligible for the incentives.
  • P100 million has been allocated to develop a web-based monitoring system for LDFG-funded projects.

Sources:

  • Senate Bill No. 405 - Filed by Sen. Panfilo 'Ping' Lacson.