SELF TEST I:

1. Considering your own municipality or province, make an assessment

regarding the contribution of decentralized local fiscal administration.
Has this strategy improved the delivery of basic services (e.g. health
and nutrition) to the concerned constituents? If so, in what ways?

For the Year Ended December 31, 2018, the Municipality of Sta. Cruz,
Ilocos Sur was able to generate a total revenue of ₱843,975,872.87 which
had increased from ₱121,229,474.13 for the Year Ended December 31,
2017, or an increase of 596.18%. The amount was sourced from the tax
revenue, the municipality’s share from internal revenue collections, other
share from national taxes, service and business income, shares, grants and
donations and miscellaneous income. Ultimately, the Municipality’s net
income for the Calendar Year 2018 amounted to ₱633,764,165.15. (Data
from COA’s website)

As can be gleaned from the above figures, it can be said that the
decentralized local fiscal administration had improved the delivery of basic
services, like health and nutrition, to the concerned constituents, through
the following programs, projects and activities of the Municipality, such as:

 Feeding program in the Municipality;

 In case of disasters or calamities, the Municipality can easily of provide
assistance to the affected community through the use of its Disaster Risk
Reduction and Management (DRRM) Fund;
 Infrastructure projects such as construction of barangay roads for better
access to transportation to certain areas;
 Free medical services for the constituents provided in the Municipality’s
Medical Center for certain medical fees;
 Provision for free vaccinations for children;
 Scholarship grants;
 Regular inspections for compliance with standards in the market;
 Providing assistance to farmers through various farm materials and
inputs such as agricultural hose, seedlings and the like within the
Municipality.

2. Being aware of the taxing powers allocated to LGUs, it seems that LGUs
may not have a reason why they cannot raise an adequate financial
resources to support their various programs to help uplift the socio-
economic conditions of their constituents. Yet, in reality, it is a bitter
irony that the promise of life is still very far from reality. In your own
 opinion, what do you think are the constraints for LGUs to maximize
the use of their taxing powers? In your own view, what sensible
solutions could you suggest to minimize these constraints?
Although the lifeblood of any government or a municipal corporation is
the money collected as taxes and other fees from its constituents for its
continuous governmental operation, various laws and the Constitution itself
provides safeguards to guarantee the right of the people against undue and
excessive taxes. To excessively tax the working populace is considered
“killing the goose that lays the golden egg”.
LGUs have no boundless authority to exact taxes that their power to tax
are limited only to that provided for by the Local Tax Code and the Local
Government Code. This constraint could be properly addressed by
introducing some amendments to broaden the taxing capacity of the LGUs.
Likewise, one of the most probable constraints on why LGUs cannot
maximize their taxing power is due to poor collection performance that may
be attributed to various factors such as inefficient and acts or corruption of
personnel tasked to implement the various tax laws and ordinances.
On this, collection performance could be enhance through strict
supervision on the people assigned on different units of the LGUs
implementing the power to tax. Also, prosecution of those found to have
committed corrupt acts prejudicial to the concerned LGU would bring a
strong message to the different personnel to be upright in the performance
of their assigned task. This will surely bring a high collection performance
by the LGU of which taxes collected could be in returned as service to the
general populace.
3. Make a rough but valid assessment of the status and prospects with
regards to the financial stability and sustainability of your own LGU
(maybe your own barangay or municipality) Make an inventory of all
possible sources of income both existing and those that are not yet
existing but could be develop as a possible source of income in the
future. Obviously, your assessment will differ from that of other LGUs
because LGUs like an ordinary human being, are not blessed equally
with resources. Given these disparities, do you think there is need for
the national government to continue the implementation of its
decentralization policy which entails decentralization of finances? Why
or Why not?

4. Try to interview one taxpayer. What is his/ her opinion regarding the
payment of taxes? If you were the local chief executive, what are the
implications of his/her opinion in your administration?
 In December 19, 2017, the Tax Reform for Acceleration and Inclusion
(TRAIN) Act, officially cited as Republic Act No. 10963, is the initial package
of the Comprehensive Tax Reform Program (CTRP) signed into law by
President Rodrigo Duterte. Through this Law an average wage earner will
have

"I don't think TRAIN will provide significant impact to an average wage
earner. It is like the government is just giving us a new perspective to look
at our taxes. You have higher pay, but electricity, transport, grocery bills
will also be higher," Michael said in an interview.

As a local chief executive in the area, I will explain to them the

importance of this Law on how it could help in our daily life.
For example unhealthy foods and beverages are being sold in higher
price than the previous years. This will help us to refrain us or to avoid
those unhealthy lifestyle that we Filipinos can live longer. Another example
will be the price of cars in the market. The tax of cars in different models
moves up, this means the government is slowly giving us the option to shift
to public transport. By improving the public transport system in the
country, this will lessen the number of cars travelling in the roads, and will
minimize the traffic particularly on urban areas.

The taxes that are collected will fund the development projects of the
government, that time the tax collected will be returned to the public.

5. Give one sensible and workable program/ project or any activity as a

possible source of revenue in your own barangay. How could this
become operational and sustainable? Present the details.

A multi-purpose cooperative could be a possible source of revenue in the

barangay.

The basic philosophy of cooperatives is mutual help. Basically,

cooperatives help instill moral values among members for a better living. It
promotes the spirit of tolerance, cooperation, and self-help.

Starting a Cooperative

1. Establish a steering committee

You need to have a group of people who represent the cooperative’s
potential members. Identify your mission and core values. Develop a plan
and a timetable for researching and developing the organization. Coordinate
a meeting of potential members to test out the level of interest in the co-op
idea.

2. Carry out a feasibility study

Examine critical opportunities and obstacles that might make or break
the formation of the organization. Consider the usual challenges like market
issues, operating costs and availability of financing. In some cases, local or
state governments may provide financial and technical assistance in
conducting a feasibility study.

3. Draft Articles of Incorporation and Bylaws

All cooperatives have to be incorporated under the appropriate state
statute. Select a legal counsel to draft or review the articles of incorporation
and bylaws. Make sure to specifically describe the kind and scope of the
organization’s business. Your cooperative can start out with very basic
bylaws and just refine them after developing the business plan.

4. Create a business plan and recruit more members

Prepare a detailed business plan that will serve as a blueprint for the
development and initial operation of the organization and as supporting
documentation for members, financial institutions and investors.
A typical business plan includes an executive summary, description of the
company, market analysis, product research and development, marketing
and sales plan, organizational structure, and financial data.

5. Secure financing
Whatever your cooperative aims to do and whoever the members are, it’s
likely to require money to allow the business to function and grow. This
cash injection can come from a variety of sources. Most of the time members
invest some of their own money. Many cooperatives apply for a business
loan while some may be eligible for start-up grants.
The amount of capital needed to get up and running varies. The amount
and type of financing needed by the co-op and the means to get it should be
included in the business plan.

6. Launch

Set up an office and hire staff if applicable. Then open the doors and
start providing goods and services in response to member needs. At this
stage you should have a viable business up and running.
How could cooperatives be sustainable?

a) Serving members
b) Minimizing costs, maximizing service

a) Serving members
Cooperatives that pay little attention to serving their members are
unlikely to survive against the competition. In order to improve services, the
cooperative must first be sure what the members want - what are their
needs and priorities? Perhaps the cooperative no longer provides a service
that members want, or perhaps the same service is provided better or more
cheaply elsewhere. Members are more likely to make use of a cooperative if
it provides responsive services at competitive prices.
To be successful, a cooperative needs at least to maintain its volume of
member transactions. With increased competition, it can do this only
through continual improvements in services while maintaining competitive
prices. Improved service may mean expanding the range of services offered
to members or improving the delivery of existing services.

b) Minimizing costs, maximizing service

To be competitive, cooperatives have to offer efficient services at
attractive prices. Increased efficiency means reducing or minimizing costs
while maintaining or improving quality This can be achieved in a number of
ways:
·
1. Through better management and use of existing facilities, equipment,
finance, procedures and people.
2. Through purchase of new or more efficient equipment.
SELF TESTS II:

1. Distinguish the primary objective of the following:

a) Taxation
 To produce revenues
b) collection of charges
 To maintain the facilities at the least
c) imposition of fees
 To regulate and maintain public order

2. In your municipality, what are the top three sources of revenues?

Can you cite as many constrain as possible in the revenue
collection performance of your LGU? What collection
enhancement measures could you suggest to improve the
revenue of your own LGU?

 The top three sources of revenues in the Municipality of Santa Cruz

are the real property tax, business tax and permits and licenses.

3. How can the fifth or sixth income Class municipalities increase

the tax revenue collections considering the limited tax base in
these areas?

 Inter-municipal Cooperation is an alternative for improved

public service delivery especially for small-sized local
government units. You could find literature on metropolitan
governance related to this issue;
 Public-Private partnerships for certain local public services
(such as local public lighting) could be an option as well;
 Increasing public transfers from central governments to assure
better equalization systems;
 Strengthening local tax collection system and eliminating free-
riding effects from neighboring municipalities.

4. Is the central grant allotment system synonymous to IRA?

Considering the “substitutive” effect or the complete reliance of
some LGUs to their IRA thereby dampening their enthusiasm to
 raise their own revenues, what should be done to overcome this
undesirable effect?

5. Are you in favor of the horizontal criteria being used in

determining the IRA share of specific LGUs? Why or Why not?
Aside from population, land area and equal sharing, can you
propose some other criteria for a more equitable sharing of the
IRA?

6. Basing the illustrative example from the module, compute for the
IRA of your municipality.

Population Criterion:
Population of Santa Cruz = 39,868
Population of Ilocos Sur = 689,668

= 0.05780

0.05780 X 12.647 = 0.7310 or approximately 731,000.00

Land Area Criterion:

Land Area of Santa Cruz = 88,780
Land Area of Ilocos Sur = 2,596,000

= 0.0341

0.0341 X 6.323 = 0.2162 or approximately 21,620.00

Equal Sharing:
1 (Santa Cruz) = 1
32 Municipality of Ilocos Sur = 32

= 0.03125

0.03125 X 6.323 = 0.19750 or approximately 19,750.00

Total IRA Share of Santa Cruz, Ilocos Sur = 0.7310 + 0.2162 + 0.1975
 = 1.1447 or approximately 1,144,700.00

7. If you were the local chief executive how will you address the
following issues:

 In places where political conflict between the Local Chief

Executive (executive branch) and the Sanggunian (legislative
branch) exists, the passage of an appropriation ordinance or
budget is normally delayed.

 The budget process is hampered by non-submission of

supporting documents by concerned offices or officers on time.

 Failure to implement or complete projects as programmed

 Lack of awareness by LGUs of available non-traditional sources
of revenues

 Low capacity of LGUs for development planning