For decades local government units have had inadequate revenues to meet their needs, which has also led to prioritizing that has left some needs short-changed, such as infrastructure financing. Financial inadequacy has also driven authorize to privatize and arrange with intergovernmental service agreement. Some revenue streams, such as income tax, are common to local government units but their proportion varies as a taxed source. Revenue sources for cities are in some cases common basic sources, such as property taxes. In others, sources are more heavily used in some than in others.
Why do we need local government taxation? Local governments are more accountable for controlling spending if they are also responsible in revenues. It will also reduce excessive demands by the local government from the national government and will allow decentralization and tax administration.
Some programs and projects for LGUs are based on certain specific grant criteria/formula such as urban population, incidence of poverty, population growth rate, annual average income, degree of urban environmental degradation, deficiencies in basic services such as sanitation and waste water disposal, storm drainage and flood prevention, solid waste collection and disposal, roads/traffic, water supply, public markets, slaughterhouses, bus terminals, etc. The above-mentioned criteria are basically used by the World Bank funded Municipal Development Project (MDP) providing local authorities with loans and grants on a 70 to 30 per cent ratio respectively in order to address municipal infrastructure requirements.
Alternative financing schemes in local government units are direct financing from the city budget, joint financing with national government agencies and government owned or controlled corporations, BOT, joint ventures with local and foreign partners, bond offerings and Loans and borrowings.
Philippine BOT Law Republic Act 6957, as amended (R.A. 7718) Authorizing the financing,...