Joint DOF-DILG circular rationalizes LGU fees

THE Department of Finance (DOF) announced in a statement on Monday that it has jointly issued with the Department of the Interior and Local Government (DILG) a circular providing the guidelines in setting reasonable rates for regulatory fees and other service charges imposed by local government units (LGUs), as part of ongoing government efforts to improve the ease of doing business in the country.

Joint Memorandum Circular (JMC)  2019-01 , signed by Finance Secretary Carlos Dominguez III and Interior and Local Government Secretary Eduardo Año, was issued to ensure that LGU fees do not unduly burden the public but are imposed only to help local governments recover the costs of services they render while making them more business friendly, in compliance with Republic Act 11032 or the Ease of Doing Business and Efficient Government Service Delivery (EODB EGSD) Act and as provided under the Local Government Code.

“In order to help LGUs build strong enabling environment for good local governance and serve our constituents fairly, particularly the business sector, we enjoin all LGUs to review, adjust, and/or revise their local revenue ordinances in accordance with the rationalized procedure for setting fees and charges,” the JMC said.

The JMC covers all local chief executives, vice governors, vice mayors, Sanggunian members, punong barangays, regional directors of the DILG and the Bureau of Local Government Finance (BLGF) of the DOF, provincial/city/municipal/barangay treasurers and heads of departments or offices in the LGU.

It applies to all fees and charges imposed by LGUs rendering services to the public. These include business permits, mayor’s permits and barangay clearances, toll fees, and billboard fees, among others.

The JMC takes effect immediately.

Under the circular, the DOF, through the BLGF, will issue the guidelines through a Local Fees and Charges (LFC) Toolkit, which comprises the direct fixed cost (e.g. depreciation of equipment and utilities, such as electricity and water used) and variable costs (e.g. salaries of personnel, cost of supplies and materials) of rendering services.

The DILG is tasked to advocate with the LGUs the importance of using the LFC Toolkit in updating revenue codes and ordinances and to institutionalize a monitoring system to ensure compliance of LGUs with the circular.

LGUs have the option to adjust the fees they impose but these should conform to the variables in the LFC Toolkit used in computing the rates and should, as much as possible, uniform for similar or comparable services and functions offered by other LGUs, the circular said.

“The revised rates shall be imposed through the issuance of an appropriate ordinance and compliance to all legal requirements including the conduct of a public hearing and publications,” the circular states.

The BLGF and the Philippine Tax Academy, in coordination with the DILG, will conduct the training and technical assistance programs for LGU personnel to help them review and set reasonable regulatory fees and charges by using the LFC Toolkit.

Every local chief executive is advised to issue an executive order creating an oversight committee on the revision of fees and charges, which will review, gather data and compute the appropriate rates based on the BLGF guidelines in the LFC Toolkit.

The committee is also tasked to recommend the local revenue ordinance necessary to effect the revised fees along with a program of action to institute reforms.

The BLGF will regularly monitor the fees and charges imposed by LGUs through the DOF-BLGF online portal, and ensure that the schedule of rates and their analysis are regularly published online and readily available to anyone.