Local government units (LGUs) have increased their collections from locally sourced revenues (LSRs) in the second quarter, but continue to rely heavily on internal revenue allotment (IRA), the Department of Finance (DOF) said.
In a report to Finance Secretary Carlos G. Dominguez III, the Bureau of Local Government Finance (BLGF) said that LSRs rose five percent to P168.96 billion in April to June 2021 compared to P161.49 billion in the same period last year.
But despite the improvement in LSRs, the amount remained well below than the current operating income required by provinces, cities and municipalities that reached P460.86 billion in the second quarter.
BLGF Executive Director Niño Raymond Alvina said IRA went up by eight percent in the second quarter to P273.21 billion from P253.63 billion a year earlier.
“On IRA dependence, provinces showed the highest dependency at 79 percent, followed by the municipalities (75 percent) and cities (38 percent) in the second quarter of 2021,” Alvina said.
The contribution of the IRA to the current operating income of LGUs in the second quarter rose to 59 percent, from 55 percent in 2020.
The LSRs accounted for 37 percent of the current operating income of LGUs, an improvement from its 35 percent share last year.
Tax revenues, mostly from local business tax and real property tax, contributed the biggest share of the LSRs in the second quarter at P135.07 billion, which is a four percent increase from the P129.65 billion collected in 2020, Alvina said.
The share of non-tax revenues, which amounted to P33.88 billion in the second quarter, increased by six percent from the P31.85 billion collected in 2020.
Other income sources of LGUs were transfers from the national government that include donations, grants and other shares in the tax collections, which amounted to P18.69 billion in the second quarter of 2021.
This was a sharp decline from the P43.99 billion that LGUs received during the same period last year when the one-time Bayanihan grant to LGUs was released under Republic Act (RA) No. 11469 or the Bayanihan 1 Law was released.
Alvina said cities collected the highest LSR at P120.31 billion, which is 72 percent of the total LSR of LGUs, followed by municipalities and provinces, with P31.16 billion (19 percent) and P15.14 billion (nine percent).
“Based on the performance targets set by this Bureau to local treasurers for FY (Fiscal Year) 2021, the LSR of provinces, cities and municipalities as of Q2 FY2021 already accounts for 74 percent of the full-year collection target of P223.89 billion,” he said.
Alvina said LBT collections, which account for 47 percent of the LSR, already reached 80 percent of the full-year target, while the collection efficiency for the RPT was at 75 percent.
Collections from fees and charges, and receipts from economic enterprises respectively a respective collection efficiency of 74 percent and 47 percent, based on the 2021 targets.
As in the previous years, the National Capital Region (NCR) posted the highest LSR collections, which reached P72.34 billion or 43 percent of the total LSR of all LGUs, Alvina said.
This was followed by Region IV-A or CALABARZON (Cavite-Laguna-Batangas-Rizal-Quezon) and Region III (Central Luzon), with a respective P26.14 billion (16 percent) and P15.54 billion (9 percent) in LSR collections.
“On a per LGU basis, there were 375 LGUs or 22 percent of the total number of LGUs that experienced decline in LSR as of Q2 FY2021, namely 29 provinces, 56 cities and 290 municipalities,” Alvina said.