LOCAL government units’ (LGUs) total current operating income grew by 12 percent to P825.2 billion in 2020 on the back of higher internal revenue allotment (IRA) and improved local tax collections.
The Bureau of Local Government Finance (BLGF) said this was higher than the LGUs’ total current operating income in 2019 at P738.54 billion. The double-digit growth in total current operating income was mostly attributed to the 18-percent jump in the external revenue sources of LGUs, including the IRA.
Revenues from external sources rose to P573.55 billion last year from P484.72 billion in 2019. Making up the bulk of external sources of revenues was IRA which amounted to P509.65 billion, up by 11 percent from P457.15 billion in 2019.
BLGF Executive Director Niño Raymond Alvina reported to Finance Secretary Carlos G. Dominguez III that LGUs’ dependence on external sources as ratio of their operating income last year increased to 70 percent from 66 percent in the previous year.
“In aggregate terms, LGUs’ dependence on external sources in Fiscal Year (FY) 2020 reached 70 percent, which is 18 percent or P88.83 billion higher than 2019 levels. On IRA dependence, provinces showed the highest dependency ratio at 78 percent, followed by municipalities (74 percent) and cities (42 percent) in FY 2020,” Alvina said.
Apart from IRA, other external revenue sources of LGUs include transfers from the national government, which amounted to P63.9 billion in 2020, more than double the P27.57 billion in 2019.
The share of these other sources in the current operating incomes of LGUs grew to 8 percent in 2020, or 4 percent higher than in 2019.
In terms of revenues from local sources, Alvina said LGUs collected a total of P251.65 billion, a slight decline of 1 percent from P253.82 billion in 2019.
Broken down, tax revenues rose to P189.86 billion from P183.46 billion in 2019 but its share in the current operating income shrank to 23 percent in 2020 from 25 percent in 2019, Alvina said.
On the other hand, non-tax revenues shrank by 12.18 percent to P61.79 billion in 2020 from P70.36 billion in 2019. Its share in the current operating income also slid to 7 percent from 10 percent previously.
Out of the P192.24 billion adjusted goal for locally sourced revenues in 2020, Alvina said provinces, cities and municipalities surpassed the target as it collected P244.19 billion.
“This represents a 127-percent collection efficiency,” he said.
Locally sourced revenues cover collections from the real property tax, local business tax, fees and charges, and receipts from economic enterprise.
Broken down, local business tax comprised almost half of the locally sourced revenues at P119.31 billion.
The remaining amount comprised real property tax collections (P70.55 billion), fees and charges (P33.33 billion) and receipts from economic enterprise (P21 billion).
Of the locally sourced revenues, cities collected 70 percent of the amount or P171.90 billion; followed by municipalities and provinces, with P44.72 billion (18 percent) and P27.57 billion (11 percent), respectively.
As in previous years, the National Capital Region collected the highest locally sourced revenues at P101.94 billion or 42 percent of the total, Alvina said.
This was followed by Region 4A (Cavite-Laguna-Batangas-Rizal-Quezon or Calabarzon) and Region 3 (Central Luzon), with P37.52 billion (15 percent) and P22.35 billion (9 percent), respectively.
As the Covid-19 pandemic took its toll on the economy, the BLGF earlier said it has set an initial local revenue collection target for this year of P223.9 billion, 30 percent lower than the original medium-term program of P321.6 billion.
The BLGF said the assessments of most local taxes this year were based on fiscal year 2020.