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The assignment of functions and intergovernmental fiscal relations in the Philippines 20 years after decentralization

Philippine Review of Economics

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Title The assignment of functions and intergovernmental fiscal relations in the Philippines 20 years after decentralization
 
Creator Llanto, Gilberto M.; Philippine Institute for Development Studies
 
Subject fiscal decentralization; tax-expenditure assignment; intergovernmental fiscal relations; performance-based grants; decentralization theorem
 
Description The 1991 Local Government Code devolved substantial spending, taxing, and borrowing powers to local government units (LGUs). Moving governance closer to the people can generate a welfare gain, but local governments must have adequate revenues to finance local development. The paper examines the current status of the tax-expenditure assignment and the intergovernmental fiscal relations, and identifies areas for reform. There is a need for a clearer and more accountable assignment of expenditure by eliminating particular sections of the code, which serve as a route for national government agencies to be engaged in devolved activities, and for politicians to insert funding for pet projects, which distort local decision making and preferences. There is need as well to review the tax assignment to improve local revenue generation. The allocation of intergovernmental fiscal transfers may be improved by introducing matching grants to improve equalization transfers to local governments, and performance-based grants to motivate greater local revenue mobilization. Without a clear funding source, unfunded mandates imposed on local governments defeat the purpose of the policy objectives set in those mandates. Local government alliances and cooperative undertaking may provide public goods with interjurisdictional spillover benefits. Consolidation, better coordination of local government activities, and resource pooling for better local service delivery are pathways indicated by successful experiences of LGU collaboration. Classification-JEL: H71, H72, H77
 
Publisher Philippine Review of Economics
 
Contributor —
 
Date 2012-08-13
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://www.econ.upd.edu.ph/pre/index.php/pre/article/view/671
 
Source Philippine Review of Economics; Vol 49, No 1 (2012): Papers and Proceedings: First PIPER Policy Forum on 20 Years of Fiscal Decentralization in the Philippines; 37-80
1655-1516
 
Language eng
 
Relation http://www.econ.upd.edu.ph/pre/index.php/pre/article/view/671/777
 
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