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PIA Press Release
2009/10/20

Mindanao LGUs eye to catalyze economic activity through local revenue generation

Koronadal City, South Cotabato (20 October) -- Local government units should not rely solely on Internal Revenue Allotments (IRA) from the national government, and should find ways to maximize their local sources of revenue, said Victor Endriga, treasurer of Quezon City.

Endriga was instrumental in implementing a groundbreaking tax collection scheme that enabled the Quezon City government to eliminate a soaring budget deficit and transform the city into a premier commercial district.

"With increased [own-source] revenues, LGUs can efficiently deliver the necessary services to their constituents," said Endriga, speaking at the 18th Mindanao Business Conference.

The conference was organized by the Philippine Chamber of Commerce and Industry and hosted by the South Cotabato Chamber, with support from the provincial and city governments, the Department of Trade and Industry, and USAID's Growth with Equity in Mindanao (GEM) Program which is implemented under the oversight of the Mindanao Economic Development Council (MEDCo).

Rhodora Raterta, deputy director for cities competitiveness of the Asian Institute of Management (AIM), pointed out that a well-implemented local revenue generation program resulting in improved services to the community, helps attract new businesses and generate economic activity.

Businesses are drawn by an enabling environment "that increases the predictability of economic interactions," Raterta said. "People will be encouraged to pay the correct taxes as long as LGUs remain transparent and accountable."

"Regulatory institutions and processes that are streamlined and accessible help to lower barriers between the formal and informal sectors, creating more [economic] opportunities," she said, adding that the private sector should support LGUs in their revenue generation efforts.

Chambers of commerce in several Mindanao cities have, in fact initiated activities supporting improved local revenue generation.

The Metro Cotabato, Sulu, and Autonomous Basilan chambers of commerce and industry, with GEM assistance, were instrumental in the signing of agreements that included their LGUS-Cotabato, Jolo and Lamitan-and the National Computer Center, related to the computerization of LGUs' real property tax and business licensing systems.

These chambers have also helped their partner-LGUs establish help desks in LGU offices for the renewal of business permits, and raise public awareness of the need to pay local government fees and taxes.

GEM, through its incentive-based Revenue Enhancement and Progress (REAP) Project, is also working with LGUs in conflict-affected areas in Mindanao, to help them raise their annual revenues from local sources by 30 to 50 percent. Several of these LGU partners have significantly increased locally-generated revenues.

In Quezon City, key revenue generation measures included increasing the discount given to real property tax payers who paid promptly; setting up "payer-friendly" assessment and payment lounges to facilitate tax payments; implementing a geographic information systems (GIS) for tax mapping; and giving recognition to outstanding business and real property tax payers.

The treasurer's office underscored its serious intent by regularly re-assigning tax division employees to other departments to prevent graft, and filing anti-graft cases with the Office of the Ombudsman against employees who issued false tax receipts.

Saddled with a P10.35-million budget deficit and P1.4 billion in inherited claims for payment in 2001, the Quezon City government is now debt-free and has a P1.5-billion budget surplus.

Endriga said the "Quezon City Experience" can be replicated by other LGUs throughout the country. "LGUs only need a strong political will to get things done," he said. (GEM) [top]

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