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Comparative Tax Effort of the LGUs Prior to and Under the LGC


The paper measures and compares the tax effort indices of local government units prior to and under the Local Government Code (1987-1991 and 1992-1996, respectively) with respect to major tax sources i.e., real property tax (RPT) and business taxes and licenses (BTL). It shows that the overall actual tax ratio with respect to BTL lagged behind the expected tax yield or the taxable capacity under the LGC due to the underperformance of the National Capital Region (NCR) despite the improved tax performance of majority of the regions. In the case of RPT, the study focuses instead on the overall tax ratio following the inadequacy of the regression approach for evaluation of the tax effort index of said tax. The overall ratio of the tax to GDP failed to grow proportionately with GDP.

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