It’s already the last week of March. By this time, deadlines have been set for the payment of taxes. About 65% of LGUs’ tax revenues are collected during the first quarter of the year – the period where most of the income comes in!
LGUs are grouped by their level of income, i.e. from 1st to 6th class. Why? Sen. Angara asked us this question during a hearing on Sen. Lacson’s SB No. 234 to institutionalize LGUs’ income classification.
According to the DOF, it is also used as a factor in the allocation of national or other financial grants and transfers. It is used to determine the salaries, wages and rates of allowances of local officials and personnel, determine the number of Sanggunian Members, among others.
Based on their Statement of Receipts and Expenditures (SREs), LGUs are classified according to their average income every four years, i.e. in 1997, 2001, 2005, and 2008 – where 1st class Cities’ income levels were above P120M, P205M, P300M and P400M, respectively. Obviously, these are way below the present figures. For FY 2015, 9 Metro Cities already earn more than P4B for a total of P89.5Billion (i.e. 40% of the total income earned by all the other 138 or 94% of cities nationwide). Quezon City was the top earner for Cities at P20.9B, while Pangasinan had the highest total operating income among all Provinces at P3.7B.
If it is the policy of the State to provide an EQUITABLE and rational system of regular income classification of LGUs that will realistically reflect their financial capacities, DOF should update it soon! But more importantly, Congress must amend the Code to ensure equal opportunities and enhance the taxing capacities of LGUs for their rightful share of income to come in and thereby ensure better quality services for the people.