LGUs income up 12% in 2020

MANILA, Philippines — Local government units (LGUs) improved their operating income by about 12 percent to P825.2 billion in 2020, but revenues are expected to dwindle this year as tax bases are brought down by the pandemic.

The Bureau of Local Government Finance (BLGF), an attached agency of the Department of Finance, yesterday said the operating income of LGUs went up by 11.73 percent to P825.2 billion in 2020, from P738.54 billion in 2019.

BLGF executive director Niño Raymond Alvina attributed the increase in LGU operating income to the heightened allocation from the national government and the enhanced collection of local taxes, including real property tax, local business tax, and receipts from economic enterprise.

Based on records, the internal revenue allotment (IRA) for cities, municipalities and provinces surged by over 11 percent to P509.65 billion from P457.15 billion. Likewise, transfers from the national government jumped by more than twice to P63.9 billion from P27.57 billion.

On the local end, taxes collected by LGUs expanded by above three percent to P189.86 billion from P183.46 billion. However, non-tax revenue generated by localities declined by at least 12 percent to P61.79 billion from P70.36 billion.

LGUs obtained 69.5 percent of their operating income in 2020 from external sources, increasing their dependency on IRA and the national government from 65.63 percent in 2019.

According to Alvina, provinces exhibited the highest dependency on IRA at 78 percent, followed by municipalities at 74 percent, and cities at 42 percent.

Further, Alvina said LGUs anticipate their fiscal performance to drop this year as local taxes will be based on receipts issued at the height of the pandemic in 2020.

Last year, LGUs collected P244.19 billion in local taxes to beat the revised goal issued by the BLGF to treasurers at P192.24 billion. Local business tax accounted for nearly half of the total at P119.31 billion, while real property tax made up around 29 percent at P70.55 billion.

On the other hand, fees and charges comprised roughly 14 percent of the local taxes at P33.33 billion, while receipts from economic enterprise took up the remaining nine percent at P21 billion. As expected, Metro Manila recorded the highest collection at P101.94 billion, close to 42 percent of the total in 2020.

Based on a local budget memorandum, LGUs are projected to get a total of P959.04 billion in national tax allocation next year, thanks to the Mandanas ruling that widens LGU share in fiscal revenues collected by state agencies.

Municipalities are penciled to secure the largest share of 34 percent at P326.07 billion, followed by cities and provinces at P220.57 billion each, and barangays, P191.8 billion.