Beggars By Choice

by Juan L. Mercado

Remember the ancient folk tale of “Juan Tamad”? Today, it is the motif of local government units (LGUs) that prefer the begging bowl to self-reliance.

The Local Government Code (LGC) empowered cities and towns to generate their own income two decades back. No, thank you, many LGUs responded. They opted to panhandle internal revenue allotments (IRA) instead, the Department of Finance notes in the latest issue of “Tax Watch.”

Seven out of every eight provinces collect less than 15 centavos of every peso they spend. They patch that gap by siphoning from IRAs. As a result, local-government spending is hobbled.

Instead of collecting taxes, towns and provinces scramble for IRA slabs from a stretched national treasury, Prof. Benjamin Diokno of the UP School of Economics noted earlier. Their delivery of service has stagnated. So has their governance.

Diokno ticked off these points at an earlier Institute of Public Economics and Regulation forum. The LGC sought to spur autonomy by decentralization. Instead, it spawned fiscal beggars. “LGUs no longer seek other sources of funds.” There—that’s the Juan Tamad syndrome.

Back in 1919, an unknown author printed the folk tale into a book titled: “Buhay na Pinagdaanan ni Juan Tamad.”

The 1957 compilation of “Philippine Tales and Fables” by Manuel E. Arguilla included the story of Juan Tamad with illustrations by Romeo V. Tabuena. A 1965 edition was illustrated with woodcuts by the late J. Elizalde Navarro, posthumously named National Artist for the Visual Arts. The out-of-print book is a collector’s item today.

It spins the tales of an indolent Juan Tamad who bucks  climbing a guava tree. Instead, he lies down below the fruits, waiting with open mouth for gravity to work. Buy mud crabs at the market, his mother ordered. Juan Tamad frees them in a ditch, instructing them to go ahead while he snoozed.

Land or real property taxes (RPT) are the latest focus of the finance department’s Tax Watch campaign. Obsolete valuations, in 62 of 80 provinces, curry favor with land-owning elites but cripple delivery of services—from health to education.

Given the festering insurgency and bandit gangs, Sulu province is the tailender, Tax Watch reports. Jolo’s local income made up a tenth of a percent of its total 2012 regular income. The rest were national doles. In contrast, the best performer was Aklan. Almost half (45.3 percent) was gleaned from local taxes and other forms of revenue.

The Juan Tamad syndrome spurs many LGUs to dodge the requirement to update taxes on real property valuation every three years. Of the 80 provinces more than half (50) dither on long-overdue mandatory chore.Maguindanao, for instance, still uses 1985 as base year. Bureau of Local Government Finance data pinpoints “deadbeats” deploying obsolete base years: Basilan (1992), Marinduque (1993), Pampanga (1994), Camarines Sur (1997), Negros Oriental (1998), Guimaras (1999), Tarlac (1999), and Zambales (1999).

In contrast, 30 provinces were “generally compliant” with the required update. But 12 of these did not use the latest base valuation year.

The 18 that used the most recent base valuations were: Agusan del Sur, Camarines Norte, Capiz, Catanduanes, Cebu, Compostela Valley, Davao del Sur, Kalinga, Laguna, Lanao del Norte, Negros Occidental, Northern Samar, Nueva Ecija, Oriental Mindoro, Siquijor, Sorsogon, South Cotabato and Surigao del Norte.

The tailenders among the “compliant” provinces were: Abra, Agusan del Norte, Benguet, Cavite, Iloilo, Mountain Province, North Cotabato, Nueva Vizcaya, Pangasinan, Rizal, Romblon and Tawi-Tawi.

The IRA share of the LGUs is 40 centavos out of every peso of national internal revenue taxes. The municipalities get the biggest IRA slab: 34 percent. The provinces and cities bag 23 percent. The barangays are at the end of the begging-bowl queue: 20 percent. In 2012, the LGUs got a hefty P273 billion in IRA.  Diokno said this spurs the stampede to convert ill-prepared towns into cities. Cities receive larger IRA chunks because of populations swollen by the flood of migrants and their sprawling land areas.

There were 60 cities in 1960. By 2014, their numbers had more than doubled to 144, many of them infected by the Juan Tamad virus, as seen in local officials’ “sense of entitlement” to doles.

Take the 20-percent Local Development Fund (LDF). It had been crafted after the 1972 UN Environment Conference in Stockholm. Delegates from 113 countries, including the Philippines, adopted an action plan that proposed a “20-20 Pact.” Governments earmark 20 percent of resources for the poorest. The fund would address the needs of the most deprived: nutrition, healthcare, medicine, potable water, sanitation, primary schooling, etc.

Instead, the LDF  is the “most abused” budget item, Interior  Secretary Jesse Robredo told local officials at a Cebu conference, shortly before his death in a plane crash. Six out of every 10 LGUs flunk the “full disclosure” criterion on tax spending in both the appropriations law and local government code, the Magsaysay awardee said.

He issued guidelines in 2011 that directed: no underwriting of  “salaries, wages or overtime pay”; no cash gifts, bonuses, food allowances, medical assistance, uniforms, no junkets or lakbay aral out-of-town jaunts; no dipping into the fund for “registration fees in training, seminars, conferences or conventions.”

That policy remains in force today. But, the policy is honored more in the breach than in practice. The begging bowl syndrome persists.


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