LGU'S Learn to Help Themselves

DUMINGAG, ZAMBOANGA DEL SUR, Philippines  – Veteran tax collector Reynaldo Saren tugs at the reins of his horse as he navigates a hillside trail in one of this municipality’s upland barangays.

The locals he meets along the way smile and wave at him, one of the few outsiders familiar with the terrain of this remote community of Subanen indigenous people.  

He waves back, before pulling up in front of a wooden house on stilts, calling out to the occupant. An elderly woman emerges and hands the collector an envelope. Saren issues a receipt and thanks her for paying her property tax on time. He then gallops on to the next barangay to continue collections.

Dumingag, a small, third-class municipality (pop. 46,000), has a revenue collection rate most cities would envy: funds generated from local sources jumped from P5.74 million in 2008 to P12.77 million in 2009, a dramatic 276-percent year-on-year increase, which will be used to improve the services and facilities provided by the local government to municipal residents.

All local government units (LGUs) are provided Internal Revenue Allotments (IRA) to fund infrastructure, livelihood and health projects, but virtually all of them need additional revenues to improve the delivery of services to the community. 

Potential revenue streams identified by the Local Government Code include taxes on ownership transfers of real property, business permit and license fees, and charges for the use of municipal fishery resources and public water and power utilities, among others.

Yet most LGUs continue to depend primarily on central government funding for the major part of their incomes. In 2002-2006, for example, 65 percent of the municipalities in conflict-affected areas of Mindanao derived less than 10 percent of their total incomes from local revenue sources.

The Zamboanga del Sur municipalities of Dumingag and Molave, however, are demonstrating that LGUs need not rely solely on their IRAs, and can in fact implement successful programs to increase their incomes from local sources.

“They can learn to reduce their reliance on IRA and instead focus on increasing their collection efficiency,” says Dumingag municipal treasurer Corazon Arbitrario.

The turning point for these municipalities came in October 2008, when officials of Dumingag, Molave and other western Mindanao municipalities attended a workshop conducted by USAID’s Growth with Equity in Mindanao (GEM) Program.

Through its Revenue Enhancement and Progress (REAP) project, the GEM Program provides LGUs with training on how to improve their own-source revenue streams in order to meet their development goals.

Implementing the strategies formulated through REAP, Dumingag officials adjusted municipal fees and charges to correspond with operational costs, and doggedly followed up delinquent payments.

“It boils down to sheer hard work on the part of the LGU,” says Emma Salmani, GEM program manager for Workforce Preparation and Governance.

Still, many residents didn’t understand why they had to pay local taxes, and how this would ultimately benefit them.

So the municipal government mounted an intensive tax information campaign to rally support – from public school teachers and businesspeople to jeepney drivers and farmers.

“During class, teachers would explain to students the importance of paying taxes. Even the police helped in our information campaign,” Arbitrario relates.

Tax collectors regularly attended barangay assemblies to explain the new tax scheme, and how the collected revenues would be used for public services.

“We were able to hit our tax collection target after only six months of implementing the strategies we learned from GEM,” says tax collector Benjamin Geografia.

The increased revenue, added to Dumingag’s IRA and other funds, covered the costs of infrastructure, livelihood and health projects.

With the help of the increased local revenue, Dumingag is also providing support to 126 local scholars who are majoring in education, information technology and agriculture at the JH Cerilles State College.

The municipal agriculture office has also conducted training and provided seedlings to help farmers diversify from traditional crops to include abaca production and sustainable tree-farming, which is anticipated to create more job opportunities.

“We are plowing back our (tax) collections into the community so that everyone can have a better life,” says Arbitrario.

Eufemia Bomez-Toos, a farmer, says: “We have realized that it is our obligation to pay our taxes.”

Meanwhile, in the neighboring municipality of Molave (pop. 45,000), customers lining up at the office of the government-run water system are able to settle their bills quickly, thanks to the office’s computerized system and trained staff.

According to Molave municipal treasurer Melita de los Santos, their local revenue collections rose 46 percent from P19 million in 2008 to P29 million in 2009, boosted by the water system’s improved collection performance.

Things were different two years ago. The municipality’s water system managers were using an outmoded manual record system that made collection difficult, and limited the water authority’s ability to respond to consumer needs. It didn’t have an office of its own, and staff were crammed into a corner of the treasury department.

After attending a seminar conducted by GEM on local revenue enhancement, municipal officials realized they had to overhaul the water unit’s internal operating procedures. 

They began with a house-to-house inventory of all water connections. “We found out that there were 1,000 registered users and 2,000 illegal connections,” recounts Gil Basay, officer-in-charge of the water system.

Basay ordered all illegal connections cut, then hired new meter readers and re-shuffled office personnel.

In a crucial move, following the advice of the GEM program, Molave revised its local revenue code so that the income records of government-managed economic enterprises such as the water system were kept separate from the records of the municipality’s general fund.

“This makes it easier for us to keep track of operational costs and charge accordingly,” Basay says, adding that the office’s recently computerized system – funded out of the increased water system revenues – facilitates better detection of illegal connections and has improved customer satisfaction.

The water authority’s total collections reached P4.6 million in 2009. This figure is expected to double within the next two years, as a new categorized collection scheme is implemented and the upgrading of the system’s pipelines is completed.

For achieving their collection targets, the GEM program will award Dumingag and Molave with incentives equivalent in cost to 50 percent of the target revenue increases they committed to under their REAP partnership with GEM. REAP incentives include infrastructure projects or equipment, based on the most urgent needs of the communities.

Through their achievements, Dumingag and Molave have shown that with enough planning, transparency and hard work, LGUs can reduce their reliance on IRA and chart their own course of development.