Ways for LGUs to gain fiscal independence from nat’l gov’t
REPUBLIC ACT No. 7160 or the Local Government Code of 1991 allows, in great measure, self-government among local government units (LGUs)—provincial, city, municipal and barangay government units. In fact, the code provides the legal framework and parameters within which LGUs may operate as independent and self-sufficient entities, making local democracy real and more relevant. This also makes local officials accountable and responsible for their decisions and actions.
In addition, the code puts special emphasis on the essence of decentralization, which is an eloquent articulation of the national government’s support for LGUs to become more self-reliant and independent. The code spells out provisions that give more governmental powers and full autonomy to LGUs in the delivery of basic services such as health, education, agriculture, environment and natural resources, local public works, etc.
The autonomy of LGUs is guaranteed by the 1987 Philippine Constitution. Section 5, Article X of the Constitution provides that “each local government unit shall have the power to create its own sources of revenue, to levy taxes, fees and charges subject to such guidelines and limitations as the Congress may provide, consistent with the basic policy of local autonomy. Such taxes, fees and charges shall accrue exclusively to the Local Governments.”
While the national government provides LGUs with a huge share of funding through the internal revenue allotment (IRA), it does not necessarily follow that IRA-dependent LGUs should now be subservient to do the bidding of the national government. The IRA is only one of the funding sources of the LGUs. They can also levy taxes and secure grants, loans and other forms of indebtedness from local banks and financial institutions.
LGUs, in my view, still enjoy immense autonomy from the national government, depending on how they wisely use their funding sources: IRA, local taxes and fees, and grants and loans. However, this entails decision-making and management competence on the part of the LGU officials, specifically on how efficient and effective they use their financial resources without being pushed and pressured by the national government. It is only then that the LGUs can enjoy genuine and meaningful local autonomy.