November 8 – 10, 2010
San Fernando, La Union
The Decentralization Program (DP) of the German Development Cooperation (GIZ), in cooperation with the Province of La Union, convenes the 2ndConference on Local Government Financing in San Fernando, La Union. National and local government officials from across the Philippines, as well as national and international experts come together in this multi-day event to discuss how to improve the fiscal performance of the local government units (LGUs) in the Philippines.
The capacity of local government units (LGU) to engage in local development depends primarily on their resources available. LGUs in the Philippines do not exhaust their potential to generate revenue. In fact, in absence of reliable collection systems, most LGUs collect only a fraction of their potential revenue (up to 40%). By improving their tax collection systems, LGUs can diversify and increase their revenue and, as a consequence, allocate more resources to local development efforts.
The conference pursues three general goals. First, it aims to raise awareness for the untapped fiscal potentials in local governance and to illustrate this with good national and international practice. In this context, Prof. Riel Franzsen, Director of the African Tax Institute offers a comparison of fiscal decentralization on Africa and South East Asia. Budi Sitepu from the Indonesian Ministry of Finance underlines the importance of local revenues as a pillar of fiscal decentralization in Indonesia. The internationalinitiative "International Tax Compact”, presented by GIZ Project Manager Roland von Frankenhorst, represents one of the growing international efforts to assist developing countries fight tax evasion and avoidance.
The second goal is to provide an overview and to discuss the practical benefits of different technical and operational options for LGUs to improve their revenue collection systems. Using IT and tailored software enables LGUs to map their jurisdictions, and to manage and enforce their revenue generation. Since 2006, DP started the implementation of iTAX, a flexible software system that assists the LGUs in the administration of revenues like local levies, real property, water charges, community, and business taxes, among others. In 2007 the Province of Negros Oriental started to implement an integrated tax administration system. A first transfer project was established in July 2008 in the Province of La Union under the supervision of the Governor. The figures are astonishing: from revenues of a little over P71 million in 2008, La Union collected over P132.5 million in 2009 (an 86.42 percent increase). In May 2010, La Union collected more than P133 million, 86.49 percent more than what it has collected by the same month last year. The total RPT gross collection in 2009 had already been reached by May 2010. Today, the program is being rolled out to the provinces of Misamis Occidental, Lanao del Norte, Pampanga, Cebu and Leyte.
Designed to improve and enhance tax collection efficiency, iTAX is a tool for making local tax administration efficient, effective and transparent. Against this background, other topics discussed at the conference include the transition to faster and easier payment systems and the options to enter in partnerships with the private sector in order to improve the public services to the taxpayers.
The third goal of the conference is to present LGU officials from around the country with a forum to discuss their experiences in revenue generation. The exchange of experiences, as well as the creation of capacity development networks, between LGUs is immensely important for the sustainable improvement of LGUs’ revenue generation once DP withdraws its support by 2012. The open forums throughout the conference provide LGU representatives with an opportunity to deliberate over ways to address the difficulties they face on their ways towards securing more revenue. With more resources at their disposal they enjoy more freedom to perform independently from the central government.
Back to News Archive