THE MOUNTAINEER

Devolution and the LGUs
EDISON L BADDAL

More than a decade now has lapsed since the implementation of RA 7160 , the law that radicalized local governance with the decentralization of many powers, responsibilities and functions from the central government to the local government
units. This was done through devolution wherein LGUs were targeted to be
eventually self-reliant through judicious and dynamic use of the wide array of
powers transferred to them.

These array of powers were categorized as follows; basic services and facilities, revenue-raising or taxing powers, corporate powers, regulatory functions and other governmental powers like police power. As envisioned, devolution was intended as the sappy answer to the clarion call of the LGUs to be freed from the stifling
yoke of the central government over them which startedwith the political
independence of the country from colonial occupation in 1946.

Besides, this transfer of authority was presumed to jumpstart the development of the LGUs having been given more leeway to plan and chart their own development at their own pace anchored on their resource endowments and native potentials.
No longer at the mercy and dictates of the central authorities in contrast with the situation of the LGUs under BP 337 during the Marcos period, LGUs became autonomous overnight by January 1, 1992 after RA 7160 was signed into law on October 10,1991.

Local leaders who assumed office on June 30, 1992 were naturally overwhelmed, discombobulated and disoriented what with the vast powers devolved to them awaiting their action and proper disposal. Such attitude wasn’t the least unexpected
as prior thereto, local officials were used to the trickle-down approach in which development projects were conceptualized at the top then rammed down to the LGUs for implementation whether its their primordial concerns or not. LGUs under BP 337 were not autonomous even as they were complacent and complaisant
at the national government's bidding and direction.

The autonomy espoused by RA 7160 unleashed the LGUs from central government control and engendered an urgent need for them to mobilize and
husband their indigenous resources to complement the regular Internal Revenue Allotment (IRA) from the National Government.

Simply put, local autonomy aimed to rev up the engine of growth in the
countrysides to complement the national government's development efforts. Practically, even prior to devolution, the LGUs functioned as the conduits of the national government in the delivery of basic services and facilities but under the maximum control and supervision of the National Government.

A scintilla of corporate powers were also exercised by LGUs as they were considered natural corporations although they failed to show much in this direction before devolution having no fiscal independence then.

Ditto with some measure of regulatory and police powers with which they are naturally invested with being an outflow of central governance in the territorial
integrity of the country. For all intents and purposes, devolution enhanced the exercise of these powers as LGUs have been given almost absolute freedom to chart their development design.

The revenue-raising or taxing powers concretized the exercise of this freedom having been empowered to levy taxes, charges and fees to supplement their IRA in prosecuting their programs. This contrasted with their previous role as mere
collectors for the coffers of the national government.

Henceforth, local autonomy should enable the LGUs to be financially stable and able to produce finances for their development PPAs by a long shot.

As LGUs maximize the exercise of their devolved powers particularly those on proprietary and revenue-raising powers or taxing powers, their IRA is expected to gradually decrease.

When that happens, the National Government would focus on raising revenues to pay for the gargantuan debts which at present has ballooned to $52 billion and consuming a big slice of the annual budget by 88%.Presently, with the automatic appropriations
for debt servicing eating a large slice of the budget, only just a mere 12% being subdivided between the National Government and the LGUs at a 60%-40% ratio. Add to the yearly deficit in the budget (which has since been whittled down since CY 2001), the national government’s developmental efforts are further stalled.

At this juncture, it is worthwhile to pose the following questions: How had the LGUs fared after 16 years of devolution? Have they maximized their devolved powers to impact on the general quality of lives of their respective constituencies?

The dismal state of things at present indicate that, except for a few, devolution failed to work favorably in most LGUs.

Most failed to optimize the exercise of their broad powers much less enhance
their self-reliance, resourcefulness and creativity. The stark lowdown points to the fact that LGUs still depend mainly on the IRA for their financial needs. In fact, they are now importuning the national government to increase their IRA by reversing the prescribed ratio of 60%-40% apportionment with the bigger proportion in their favor. Thus, it could be signalized that LGUs likewise failed to maximize their proprietary and taxing powers.

This is because LGU leaders are generally pusillaminous to raise taxes or initiate
entrepreneurship programs in their backyards for fear of erosion of political support. Just like their pre-devolution counterparts, their main livelihood program is the traditional provision of seasonal employment through short-term infra projects.

They also failed to institute trenchant measures to upgrade their local
economies as shown by the country's so-so Gross Domestic Product in the
years since then except for 1996 under Ramos, and the years 2004, 2006, and
2007 under Arroyo. The Nation's GDP is the sum total of all economic performances
of the component LGUs as indicated by the latter’s mobilization of available resources.

Such fact is an enough ground to extrapolate that failure of LGUs to optimize the
exercise of their proprietary and taxing powers as enumerated from Secs. 134 to 164 is among the culprits for the slow growth of the nation’s economy as compared with its neighbors.

Curiously, strategic partnerships with the private sector as encouraged by the code under debureaucratization was not much resorted to either by most LGUs as the private sector have not been considered a major stakeholder in upgrading local economies.

Moreover, LGUs failed to lend a hand with the BIR personnnel in collecting taxes due for the national treasury like excise taxes, ad valorem taxes, E-VAT and others. One critical category of national tax in which LGUs failed miserably to lend a hand to the BIR is the collection of income taxes of self-employed people.

A recent study revealed that hundreds of thousands of self-employed people failed to remit the right taxes to the national government in 2003 so that for CY 2004, the national government was defrauded in the amount of approximately 105.74 billion pesos in income taxes from the self-employed sector.

Hence, for the 96.7 billion pesos of income taxes remitted to the government in 2003, the salaried employees paid the bulk at 84.29 billion pesos (87.1%) while self-employed individuals accounted only for the measly contribution of 12.41 billion pesos (barely 12.9% of the total).

The above gloomy deduction, however, is gainsaid by the stupendous achievement of some LGUs managed by innovative and transformative leaders. A sterling example
is the awesome turn-around in the financial health of Quezon City, starting in CY 2001 when Sonny Belmonte commenced his first term. Before that, the city always suffered chronic deficits since the ‘90’s and at one time reached a staggering 970 million pesos due to refractory corruption and rampant tax evasion.

Belmonte mustered enough political will to nurse the financial state of the city back to health upon his assumption to office. In order to realize his long term vision of a " financially stable Quezon City", he adopted the presumptive taxation
(Wherein businesses were imposed a minimum amount of income from which their tax payments will be based - sic), granted discount credits to early taxpayers, auctioned off properties of tax delinquents, grounded revenue examiners with low collection records, and filed graft charges against suspected corrupt city
government employees and officials among other effective measures. Investing passion in the implementation of the above measures garnered for Quezon City the disputable tag of being the richest city nationwide in CY 2004 what with a 16.5 billion peso income in that year. In fact, it was once touted as the most outstanding LGU nationwide.

Hence, it is not wishful thinking to assume that political will and innovativeness spell the difference between the success and failure of LGUs under the aegis of
devolution. At most, they are the missing links for self-reliance and local autonomy to thrive in the LGUs. Moreover, they are the vehicles to pump prime and pole vault local economies in particular and the national economy in general.

The immense success of Quezon City in harnessing its endowments under devolution
is proof that devolution is a mighty stimulus that may awake the sleeping giant
of this hobbling nation to gain respect in the community of nations.