Senate Bill Proposes One Percent VAT Allocation
MANILA, Philippines — Senate Bill No. 405 aims to allocate one percent of the value-added tax (VAT) revenues to support local government units’ development projects. The bill, filed by Senator Panfilo “Ping” Lacson, targets LGUs that boost their VAT collection by at least 10 percent compared to the previous fiscal year.
“Such incentives are designed to serve as motivation for LGUs to facilitate business operations and reduce barriers for small entrepreneurs, hence further enhancing tax collection efficiencies,” Lacson said. This proposed one percent VAT fund intends to encourage local governments to improve tax collection and promote economic growth.
Mechanisms for Implementation and Monitoring
The bill assigns the Bureau of Local Government Finance and the Department of Finance to verify the VAT collection performance of LGUs. Meanwhile, the Department of Budget and Management will be responsible for distributing the incentive funds.
The incentives will be disbursed through a special Local Government Development Fund (LGDF), which will source its budget from one percent of the actual VAT collections starting fiscal year 2022. This fund aims to empower LGUs with additional resources for local projects.
Furthermore, the measure includes capacity-building programs to improve local governance frameworks. These programs focus on enhancing public service delivery and ensuring fiscal accountability to maximize the effectiveness of LGDF-funded projects.
Ensuring Transparency and Accountability
To guarantee transparency, the bill allocates P100 million to develop a web-based monitoring system. This platform will track LGDF-funded projects and promote accountability among local officials.
Senator Lacson emphasized, “Giving the LGUs the necessary wherewithal to be active participants in the development of our country will contribute to dismantling the culture of mendicancy and political patronage that viciously thrive in our system.”
He added, “Ultimately, this will help in the realization of the elusive inclusive growth that the Filipinos all aspire for as a nation.” Local leaders noted that empowering LGUs through such incentives can transform governance and foster nationwide progress.
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