LGU digital collection still small despite shift

MANILA, Philippines — The Department of Finance (DOF) is urging local government units (LGUs) to ramp up their digitalization processes as tax collections at the local level remain small even as the pandemic expedited the digital shift.

Finance chief Benjamin Diokno said during the second quarter, local business tax collections jumped by 58 percent to P83.7 billion while real property tax collections soared by 42 percent to P60.68 billion.

However, total local collections from digital platforms only amounted to P5.8 billion, which is just 2.3 percent of the total local collections of LGUs.

Last year, only five percent of LGUs implemented methods to accept electronic payments through the electronic payment and collection system.

Diokno is encouraging LGUs to implement digital innovation and transformation, especially in local treasury and assessment offices.

This involves adopting digital or electronic facilities for business registration and renewal and, most importantly, for the assessment and collection of local taxes, fees, and charges.

“Businesses swiftly embraced digital payments during the height of lockdowns, where mobility was restricted, in order to survive the uncertainty caused by the pandemic. Citizens rapidly embraced this change as well, which aided in the expansion of e-commerce and the transition to online payments,” Diokno said.

“To ensure that taxpayer transactions are simpler, safer, and quicker, government agencies, including LGUs, must implement online payments as well,” he said.

As part of the administration’s eight-point socioeconomic agenda, the government targets to optimize digitalization in improving tax administration and broadening financial inclusion.

The government is aiming to digitalize 50 percent of all retail payments and onboard 70 percent of the adult population to the formal financial system by next year.

The DOF is calling on local treasurers to establish connections with the authorized government depository banks that provide online payment services to guarantee that there are convenient and safe ways to transact with LGUs.

“We also encourage local assessors to digitalize their assessment procedures and records for faster and efficient transactions within their respective offices,” Diokno said.