Introduction

Existence of the Local Government Units in the Philippine Political System

is one of the key features of the rule of democracy in the country as this provide

people empowerment and greater opportunities for the members of the state to

exercise executive and legislative powers once elected in the position. However,

the local government units do not only function on mere human power but as well

as financial machinery. This research material would set focus on alternative

revenues raising mechanism including its necessity for its employment and

efficiency for the continuous operations of the said local government unit.

Background of the Study

Throughout our history as a colony and as a struggling Commonwealth

nation, our people at the local level had borne such imposition with patience and

perseverance under colonial rule. True, the tributes or taxes imposed on our

people forced several bloody uprisings. But they would eventually toe the line, as

it were, believing that their taxes would go back to them in terms of public works

and other community-uplifting projects.

Under the Malolos Republic, the Aguinaldo government started and

intensified the imposition of taxes too. He had asked the people’s help to

shoulder the cost of the nation’s libertarian struggle, first against Spain and later

America. It was during the American colonial administration (1901-35), when the

imposition of taxes, particularly among the local government units, became more

systematic. The succeeding periods of our history- the Commonwealth and the

advent of Independence in 1946- witnessed more tax impositions and charges

that had to be borne by our people more particularly the local folk.

Later with the passage of a series of local autonomy-oriented laws and

executive issuances, a part of the revenue imposed to boost the national treasury

under a centralized government set-up trickled to the local communities. For

instance, upon the issuance of Presidential Decree (PD) No. 144 in 1974, the

system of allocating funds to local governments, especially barangays, was

revised under the National Internal Revenue Code and related laws. Then the

barangay share from the Highways Special Fund was increased, as provided

under PD 558.r In November, 1977, PD 1240 was promulgated amending the

Real Property Tax Code to increase the share of the barangays in real property

tax collection from 5 to 10 percent of the provincial and municipal collections.

Under the LG Code of 1991, the tax share for the various LGUs has

further risen. Indeed, following the devolution of taxation powers and resources

to the local units more sources of revenue like the IRA have been duly expanded

and increased. And through the ingenuity and imagination of the local

legislatures (Sanggunians), LGUs are now coming up with more enabling

legislations to raise additional revenues for the delivery of basic services and

implementation of infrastructure and income-generating programs and projects.

BASIC PRINCIPLES

At any rate, the new taxing powers take into account the fundamental

principles that govern the LGUs’ right to enact enabling ordinances. These

principles include the following:

The taxation shall be uniform among all LGUs:

That taxes, fees, charges, and other impositions shall be equitable

and based on the taxpayer’s ability to pay; that they must not be

unjust, excessive, oppressive, or confiscatory; and not be contrary

to law, public policy, national economic policy, or in restraint of

trade;

That the taxes be levied and collected only for public purpose;

That the collection of taxes, fees, charges, and other impositions

shall in no case be let to any private person;

That the revenue collected pursuant to the LG Code shall accrue

solely to the benefit of, and be subject to disposition by the LGU

levying tax, fee, charge, or other imposition unless specifically, and

accordingly provided; and

That each LGU shall, as far as practicable, evolve a progressive

system of taxation. (Source: page 17 to 19 Local Finance and

Budgeting by Abletez and Chua)

Basically, all local government units in the Philippines have their sources

of funds for the continuous maintenance and performance of their respective

offices as a governmental institution and thus perform and satisfy the basic social

services needed for by the people in their jurisdiction. The Local Government

Code mandates in Section 289 that local governments shall have an equitable

share in the proceeds derived from the utilization and development of national

wealth within their respective areas, and share these with inhabitants by way of

direct benefits. In addition to this, Section 290 of the Local Government Code

provides that Local governments have a share of 40 per cent of the gross

collection of which national government derives collection from the preceding

fiscal year from numerous sources, including mining taxes, royalties, forestry and

fishery charges and other taxes, fees or charges (including surcharges, interests

or fines) from its share in any co-production, joint venture or production sharing

agreement in the utilization and development of the national wealth within the

territorial jurisdictions.

Though the Local Government Units do have their sources of revenues

from the basic taxes collected by the National government, man, by its nature,

sees these tax collection ideas as "burdening", "overworking" and "exhausting" of

which such antagonism is well demonstrated by the incidence of tax avoidance

and evasion done by certain individuals (Roget's Thesaurus). The problem now

lies on how the Government could diminish among the people such antagonistic

idea regarding taxation. In order to solve this endeavor, one theory that was

formulated was the “zero – taxation rule” in which taxes are to be totally

abolished. The substitute recommended for the abolishment of taxes is

alternative revenues raising mechanisms (though it may also be practiced in

forms of taxes, the people now have the less antagonistic idea regarding taxation

as “diminished” by the “zero-tax rule”).

In the Philippine setting, the “zero – tax rule” is not really absolutely

practiced as there are some basic taxes that serve as sources of revenues for

the government like for example real property tax and business tax. As

mentioned earlier, these taxes serve as the sources of fund together with the

different alternative revenues raising mechanism to be utilized for the growth and

development of local government units. In relation to this, the City of Dasmarinas,

the fourth city in the province of Cavite which was inaugurated in the year 2009

could be the best example of a local government unit which exhibits sustainable

growth and development and thus, is the main subject of this research material.

Statement of the Problem

Generally, this research material titled “Alternative Revenues Raising

Mechanism : Necessity and Efficiency on the Local Government Unit of the

City of Dasmarinas” seeks to set focus on the idea of alternative revenues

raising mechanism.

Specifically, this aims to clarify things based on the following questions:

1. Why is there a need for the employment of alternative revenues raising

mechanism for the local government of the City of Dasmarinas?

2. What are the sources of the alternative revenues raising mechanism of

the local government of the City of Dasmarinas?

3. How effective are such alternative revenues raising mechanism in

terms of the efficiency of the City of Dasmarinas as a local government

unit?

Scope and Delimitations

The extent of this research material would only focus on the available

theories and studies related to the main topic of this study as well as the existing

alternative revenues raising mechanism employed by the City of Dasmariñas as

supported by documents gathered from the said local government unit. The study

would also set its limits on the views and opinions provided by selected students

who studies and/or resides City of Dasmariñas when it comes to the efficiency of

the said alternative revenues raising mechanism.

Significance of the Study

This research study, more than a research material would serve its

purpose on the following:

Residents of the City of Dasmariñas. As this research material

would provide and expound on the different alternative revenues

raising mechanism employed by the local government of the City of

Dasmariñas, the residents, most especially those directly affected by

the said alternative revenues raising mechanism, will be able to

understand the reasons behind said mechanisms and into where are

the incomes from the said mechanisms are being utilized. Further

more, if proven that said mechanism are of efficiency on the operation

of the local government unit, this study might be able to encourage the

residents of Dasmariñas City to render support on the mentioned

mechanisms.

Other Local Government Units. Considering the continuous growth

and development exhibited by the City of Dasmariñas, other local

government units might also consider on their revenues raising

mechanism the ones employed by the local government of the City of

Dasmariñas and thus, be able to inhibit similar growth and

development of the City of Dasmariñas.

Academe including the future students who might set focus on

a similar study. This research material might be of importance as

future sources of literature for future similar studies to be conducted by

members of the academe most specially, the students.

Presentation, Analysis and Discussion of Data

With the extensive collaboration of the researchers on the local

government unit of the City of Dasmariñas, the following data regarding on why

is there a need on the employment of the different alternative revenues

raising mechanism are set to focus and is quoted:

“With regards to the reason on why is there a need for an alternative

revenues raising mechanism, the City Government endeavors to be self-reliant,

continues exercising the powers and discharging its duties, functions, and

actively participates in the attainment of national goals. Consequently, the City

Government is empowered to generate alternative revenues raising mechanism

in supplement to its basic sources of funds in order to provide various services

that are necessary, appropriate, or incidental to efficient and effective

implementation of its development plan, program objectives, and priorities as

provided for in Sections 18, 129, 153, 154, and 155 of the Local Government

Code.

SEC. 18. Power to Generate and Apply Resources. - Local government

units shall have the power and authority to establish an organization that shall

be responsible for the efficient and effective implementation of their development

plans, program objectives and priorities; to create their own

sources of revenue and to levy taxes, fees, and charges which shall accrue

exclusively for their use and disposition and which shall be retained by

them; to have a just share in national taxes which shall be automatically and

directly released to them without need of any further action; to have

an equitable share in the proceeds from the utilization and development of the

national wealth and resources within their respective territorial

jurisdictions including sharing the same with the inhabitants by way of direct

benefits; to acquire, develop, lease, encumber, alienate, or otherwise dispose of

real or personal property held by them in their proprietary capacity and to apply

their resources and assets for productive, developmental, or welfare purposes, in

the exercise or furtherance of their governmental or proprietary powers and

functions and thereby ensure their development into self-reliant communities and

active participants in the attainment of national goals.

SEC. 129. Power to Create Sources 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, andcharges shall accrue exclusively

to the local government units.

SEC. 153. Service Fees and Charges. - Local government units may impose and

collect such reasonable fees and charges for services rendered.

SEC. 154. Public Utility Charges. - Local government units may fix the rates for

the operation of public utilities owned, operated and maintained by them within

their jurisdiction.

SEC. 155. Toll Fees or Charges. - The sanggunian concerned may prescribe the

terms and conditions and fix the rates for the imposition of toll fees or charges for

the use of any public road, pier or wharf, waterway, bridge, ferry or

telecommunication system funded and constructed by the local government unit

concerned: Provided, That no such toll fees or charges shall be collected from

officers and enlisted men of the Armed Forces of the Philippines and members of

the Philippine National Police on mission, post office personnel delivering mail,

physically-handicapped, and disabled citizens who are sixty-five (65) years or

older. When public safety and welfare so requires, the sanggunian concerned

may discontinue the collection of the tolls, and thereafter the said facility shall be

free and open for public use.”

Going through the given statement, the main reason would have been for

the continuous exercise of the local government of the City of Dasmariñas of its

function as a governmental institution that renders services and facilities to its

people. Considering the present population of Dasmariñas City, which amounts

to over 700,000, excluding those people who does not render permanent

residence in the City itself yet needs to be provided with the basic services

(general security and other basic services), it can be inferred that the share

obtained by the local government of the City of Dasmariñas is not enough to

meet through the basic needs of the residents of the people and thus,

necessitates the employment of alternative revenues raising mechanism.

Moving forward on the different revenues raising mechanism employed

by the local government unit of the City of Dasmarinas, the following data were

provided by the local government unit concerned:

“1.) Service Fees and Charges

- To impose a duty, responsibility, or obligation on and the word

fee denotes paid or received for a service rendered.

a. Weights and Measures

b. Permit Fees (Mayor’s Permit, Motorized Tricycle Operator,

Building Permit Fees, and Subdivision Fees)

c. Registration Fees (Birth, Death, Marriage, Ante – Mortem Fees)

d. Clearance and Certi fication Fees

e. Zoning Fees

f. NSO Share

g. Secretary’s Fees

h. Medical, Dental, Lab Fees

i. Police Clearance Fees

j. Sanitary and Health Clearance

k. Library Fees

l. Tax Clearance Fees

m. Garbage Collection Fees

n. Violation of Ordinance

o. Inspection Fees

p. Fire Inspection Fees

q. Cemetery Operation

r. Markets (Central and Dasmarinas Bagong Bayan Market)

s. Transfer of Stalls

2. Toll and Terminal Fees

- a payment or fee exacted by the state, the local authorities, etc.,

for some right or privilege, as for passage along a road or over a

bridge.

3. Dividend Income

- Distribution of earnings to shareholders that may be in the form of

cash,stock, or property. Mutual fund dividends are paid out of income,

usually on aquarterly basis, from interest generated by afund's

investments. Also known as a dividend distribution.

(www.asia.advfn.com/money-words_term_6689_Dividend_income.html)

4. Interest Income

- The term that companies use on their income statement for

reporting the interest earned on cash temporarily held in savings

accounts, certificates of deposits, or other investments. Because the

interest wasn't part of the original investment, they record it separately, as

interest income. (www.investorwords.com/6844/interest_income.htmlv)

5. Miscellaneous Income

- Miscellaneous Income is that income realized that is not directly

related to the sale of standard products and services.

6. Capital Revenue (Sale of Fixed Assets)

- In governmental accounting, it is defined as any asset used in

operations with an initial useful life extending beyond one reporting period.[2] Generally, government managers have a "stewardship" duty to maintain

capital assets under their control

7. Grants and Aid

- Section 23 of the Local Government Code states that the "local

chief executive may, upon authority of the Sanggunian, negotiate and

secure financial grants or donations in kind, in support of the basic

services or facilities enumerated under Section 17 hereof, from local and

foreign assistance agencies without necessity of securing clearance or

approval therefore from any department, agency or office of the national

government or from any higher local government unit." Grants may be

sourced from local and foreign sources to support water resource

utilization and conservation projects and enforcement of fishery laws in

municipal waters, including the conservation of mangroves (Section 17b21

of the Local Government Code). Sources of these funds are, however,

only recently being developed and are not available to all LGUs.( Primer

on Coastal Resource Management. 1999. CRMP/DENR/USAID, Cebu

City, Philippines) 

8. Extra Ordinary Receipts ( Share from Economic Zones – FCIE and

Share from Philippine Amusement and Gaming Corporation

(PAGCOR) / Philippine Charity Sweepstakes Office (PCSO))

With decentralization and greater autonomy, local governments are

given a great deal of responsibility and trust in handling and husbandring

of their income or appropriations including taxes and other sources of

revenues and receipts. In anticipation of such a need, the new Local

Government Code also provides for the proper management in terms of

prudent expenditures and disbursements as well as the accounting of

public funds. and with the tremendous increase in LGU finances, such

provision is imperative.”

Setting focus on the last problem of this research material regarding the

efficiency of the said alternative revenues raising mechanism when it comes

to the satisfaction or whether it serves the purpose of its existence and

employment, considering the development of the local government unit of

Dasmarinas from a Municipality to a City in the year 2009 it can hardly be said

that yes, the alternative revenues raising mechanism employed by the local

government is efficient. In addition to this, the various projects of the City of

Dasmarinas not to mention the lighted center islands, traffic signal lights,

pedestrian foot bridge with elevator, closed – circuit television cameras, efficient

city public library, and public sports complex could strongly prove that the funds

from the alternative revenues raising mechanism are being utilized in a just and

effective way for the welfare of the people.

SYNTHESIS AND RECOMMENDATION

Dasmarinas City, being one of the most populous City in the country,

could have been the best subject on exploring on the matter of alternative

revenues raising mechanism when it comes to its necessity (considering its

population, as the basis of the necessity of its employment) and efficiency of its

employment. The City government has clearly set such mechanisms in order to

provide and satisfy the basic needs of its people. Looking at the projects initiated

by the City government such as the lighted center islands, traffic signal lights,

pedestrian foot bridge with elevator, closed – circuit television cameras, efficient

city public library, and public sports complex could strongly prove that the funds

from the alternative revenues raising mechanism are being utilized in a just and

effective way for the welfare of the people. Another fact to consider on the aspect

of its efficiency is the development of the City of Dasmarinas as a mere

Municipality and now, as one of the Cities of the Province of Cavite.

The proponents of this study recommend the following matter that

primarily deals with the findings of the study:

1. That proper support from the residents of the City of Dasmarinas be

rendered on the alternative revenues raising mechanism employed by the

city government. Such matter on the mere support to be given by the

residents could go far as this would enhance and strengthen the services

that will be given by the City government of Dasmarinas into its people.

But then, mere support does not assure the efficiency of the mentioned

alternative revenues raising mechanism. Resident’s vigilance on whether

these revenues are properly appropriated must also be taken into

consideration.

2. Other local government units most especially those within the Cavite

Province might as well be able to employ in their jurisdictions some or

similar alternative revenues raising mechanism in order for them to be

able to satisfy and support their roles and function as local government

units. These alternative revenues raising mechanism might also be a key

for these local government units to deliver their services in a better and

more satisfying way to the people in their jurisdiction.

SOURCES

www.investorwords.com/6844/interest_income.htmlv

www.asia.advfn.com/money-words_term_6689_Dividend_income.html

www.dasma.gov.ph

Local Finance and Budgeting by Abletez and Chua

Local Government Code of 1991

City Council of Dasmarinas