LOCAL REVENUE GENERATION

SECTION 129. Power to Create Source of Revenue - Each local government unit shall exercise its power to create its own sources of revenue and to levy taxes, fees, and charges subject to the provisions herein, consistent with the basic policy of local autonomy. Such taxes, fees, and charges shall accrue

a. Land-based Tools b. Community Activity-based Tools c. Infrastructure-based Tools d. Debt-based Tools e. Revenue sharing Tools

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Basic Real Property Tax (Sec. 232). Special Education Fund SEF Real Property Tax (Sec. 235). Land Transfer Tax (Sec. 135). Idle Land Tax (Sec. 236). Public Land Use Tax (Sec. 235a). Land Sale of Foreclosed Real Properties (Sec. 257, 258 and 260). Land Investment Land Reclassification (Sec. 20). Land Development Permit Fee (557 and 558). Tax on Sand, Gravel and other Quarry Resources (Sec. 138).

1. 2. 3. 4. 5. 6. 7. 8. 9.

Business Tax (Sec. 143) Community Tax (Sec. 156) Franchise Tax (Sec. 137) Tax on Business of Printing and Publication (Sec. 136). Professional Tax (Sec. 139). Amusement Tax (Sec. 140). Annual Fixed Tax on Delivery Trucks or Vans (Sec. 141). Fishery Rentals, Fees and Charges (Sec. 149). Service Fees and Charges (Sec. 153).

1.Special 2.Toll

Levy (Sec 250) Fees or Charges (Sec. 155). Utility Charges (Sec. 155).
6

3.Public

1)Debt

302). 18

Financing (Sec. 297Investment (Sec

2)Financial

1)Share

in Mining, Fishery, and Forestry Taxes (Sec. 290). in the Gross Sales or Taxes of GovernmentOwned and Controlled Corporations (Sec. 291).
8

2)Share

 Traditional method: Estimates income on the basis of

Past collections Newly enacted tax ordinances Amendments to existing tax or revenue ordinances Program of tax collection campaign

 Revenue

forecasting

Estimates income based on the

average growth rate of the actual income for the last five years.
Presumptive Income Levels (PIL) estimates tax bases for business and amusement tax
Firms electric bill Number of employees Amount of inventory (countercheck the amount of gross receipts declared by the tax payer)

 Collection

done mainly by the Treasurers office

(all taxes, fees and charges shall be

paid within the first twenty(20) days of January and of each subsequent quarter)

Factors affecting the collection efficiency of the local treasurers office Limited personnel Inadequate records-keeping and management systems Political mediation Precarious peace and order condition in the locality Low tax ethic Lack logistics Revenue data bank

 Vertically

integrated planning

Provides local governments with the

connection to the broader and longerterm framework of development

Local

development planning

Identification of development programs

and projects that are appropriate for credit financing Basis for budget proposals and reference in preparing work and financial plans. Basis of recommendation of spending for

 Local

Government Budget Process

Legal instrument which authorizes

the expenditure of public funds Accounting framework for fixing the fiscal stewardship of public offers Management tool for planning the direction and magnitude for the utilization of government revenues and receipts

Setting a local government budget involves three key decisions: 1) Allocation 2) Distribution 3) Stabilization/Growth The Allocation Decision is based in three criteria: 1) Economic efficiency 2) Technical efficiency 3) Net social benefits/costs

Budgeting Cycle

Executive Budget Local Chief Executive Local Finance Committee Done between July 15 and October 15 of the current year Transmitted to the Local Sanggunian not later than October 16

Legislative discussion of proposed budget is done by the Sanggunian between October 16 and November 17 Enact annual budget by issuing an appropriation ordinance on or before the current fiscal year

Submission of the budget for review is required within 10 days

The review action by the reviewing authority may lead to either the declaration of the budget as to the following :

This phase involves the release and actual disbursement of funds for the identified functions Work and Financial Plan and Request for Allotment

 Budget

Preparation

Expenditure items
Mandatory contributions (required prior to the Codes effectivity) Social security and insurance benefits of employees Reserve money for earned leave credits of retiring employees Gratuities of employees that are optionally retiring Personal services

 Budget

Authorization

Conflicts between the executive and

legislative branches of the local government cause the delay of the passage of the budget (opposing political camps/party)

 Budget

Review

Change in the process of review of

appropriation led to non-conformity of review actions and decisions

Some sanggunians would authorize anything appropriated by lower level of local units for political purposes Failure to submit supporting documents on time

 Budget

Execution

Non submission of work and financial

plan and request for allotments by the heads of departments or offices Non submission of supporting documents for the request for allotments. Use of appropriated funds or savings

 Budget

Accountability

Delayed submission of financial

statements to the local finance committee by the local accountant LGU failed to prepare development programs for the 20% Development Plan LGU appropriated funds for development projects less than the level of appropriation required LGUs failed to implement or complete

 Budget

Accountability

Incurrence of cash drafts due to

improper use of trust funds Disbursements which lead to disallowances after audit Failure by LGUs t conduct periodic physical inventory or to maintain complete property records Failure to liquidate cash advances, thus making those advances accumulate through the years.