LocalGovernmentNaturalResourceRevenueManagement

andNationalBenefitSharing

NIÑORAYMONDB.ALVINABureauofLocalGovernmentFinanceDepartmentofFinancePhilippines

EXPERIENCE OF THE PHILIPPINES

LegalFrameworkThe1987Constitutionguaranteestheequitabledistributionofopportunities,incomeandwealth.Specifically,itmandatesthat:LGUsshallbeentitledtoanequitableshareintheproceedsoftheutilizationanddevelopmentoftheNationalWealthwithintheirrespectiveareas,inthemannerprovidedbylaw,includingsharingthesamewiththeinhabitantsbywayofdirectbenefits.

The1991LocalGovernmentCode(LGC)alsoprovidesforthe:“equitableshareofLGUsandlocalcommunitiesintheproceedsfromutilizationofnationalwealthbasedonaprescribedformula.”

PhilippineSub-NationalNaturalResourceRevenues

Theyhosttheminingsites,oil,andgasfields,andprincipalofficesofextractiveindustries.Theyreceiverevenuesfromextractiveindustries(throughdirectorindirectpayments).Theyshouldbeconsultedonanyprojectsthatimpactontheenvironmentandecologicalbalanceofcommunities,includingtheextractionofnaturalresources.

Localgovernmentsplayanimportantroleinsubnationalimplementationoftransparencyinitiativesonnaturalresourcerevenues:

• CollectionbasedonNationalLaws• CollectionbasedonLocalTaxCodes

DirectPayments

• SharesfromNationalWealth• InternalRevenueAllotment

IndirectPayments

HowmuchdidGovernmentCollect?Frommining,oilandgassectors

BasedontheEITI2015Report(using2013revenuedata)

LocalgovernmentsreporteddecliningsharesfromnationalwealthinFY2014,butrevenuespickedupin2015

621.10

65.20

964.56

327.35

148.10

899.04

108.00

279.35

1,217.80

0

200

400

600

800

1000

1200

1400

Provinces Cities Municipalities

SharesofLocalGovernmentsfromNationalWealth

(FYs2013-2015),inPhpM

2013 2014 2015

23%

11% 67%

AverageDistributionofSharesReceivedbyLocalGovernments

(FYs2013-2015)

Provinces Cities Municipalities

In2015,around200LGUshavereportedrevenuesfromOtherSharesfromNationalWealthestimatedatPhp1.605B

Others/EnergyResourcesProduction11.05% Forestry

Charges0.17%

MineralReservations

4.99%

MiningTaxes66.62%

UtilizationOfHydrothermal,GeothermalAndOtherSourcesOfEnergy17.17%

Nationalwealthpertaintoallnaturalresourcessituatedwithin

thePhilippineterritorialjurisdictionincludinglandsof

publicdomain,waters,minerals,coal,

petroleum,mineraloils,potentialenergyforces,gasandoildeposits,forestproducts,

wildlife,floraandfauna,fisheryandaquaticresources,andall

quarryproducts.

40%ofgrosscollectionfromminingtaxes,royalties,forestryandfisherycharges,andsuchothertaxes,fees,includinginterests,orfines,andfromitsshareinanyco-production,jointventureorproductionsharingagreementwithintheirterritorialjurisdiction.

Distributingtheshares…

Ifthenaturalresourcesarelocatedinmunicipalityor

componentcity:

Barangay,35%

Province,20%

ComponentCity/

Municipality,45%

Ifthenaturalresourcesarelocatedinhighlyurbanized

orindependentcity:

Barangay,35%

City,65%

Ifthenaturalresourcesarelocatedin2ormore

provinces,in2ormorecomponentcitiesor

municipalities,2ormorehighlyurbanizedor

independentcomponentcitiesorin2ormore

barangays

LandArea,30%

Population,70%

GoalsofRevenue/WealthSharing1. Compensateforthenegativeimpactsofuseand

exploitationofthenaturalresources;

2. Mitigateconflictsrelatedtorights/ownership/use;

3. Supportthecostofdevolvedpublicservicefunctionstobedeliveredbythelocalgovernments;and

4. Helpaddressdisparitiesindevelopment,poverty,andincomeofLGUs.

HowmuchdotheseSharesfromNationalWealthconstitutetheOperatingIncomeofLocalGovernments

2012Sharefrom

NationalWealthAnnualRegular

Income Ratio

Province 453.99 43,086.33 1.05%Cities 181.54 21,585.92 0.84%

Municipalities 1,050.57 15,500.06 6.78%Total 1,686.09 80,172.31 2.10%

2013Sharefrom

NationalWealthAnnualRegular

Income Ratio

Province 658.16 49,843.57 1.32%Cities 171.85 28,553.55 0.60%

Municipalities 1,114.16 16,350.07 6.81%Total 1,944.16 94,747.18 2.05%

2014Sharefrom

NationalWealthAnnualRegular

Income Ratio

Province 461.06 54,764.75 0.84%Cities 122.89 37,305.63 0.33%

Municipalities 934.52 19,117.32 4.89%Total 1,518.47 111,187.70 1.37%

0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00%

2012 2013 2014

DecliningtrendasIRAissignificantlyincreasingannually

Province Cities Municipalities Total

Challenges

Aneedformoretransparencyandaccountabilityintheextractiveindustriesandothersharesfromnationalwealth

Lackoforconflictinginformationontaxespaidandbenefitsreceivedbycommunitiesfromextractiveindustries

Delays,variancesinthereceiptsofrevenuesharesoflocalgovernments

LGUcollectionfromlocaltaxes,feesandothercharges;

Receiptofsharesfromnationalwealthasportionofcollectionsfromextractiveindustries;

ExpendituresofLGUsonthereceiptsfromothersharesfromnationalwealth;and

Monetaryandnon-monetarybenefitsreceivedbyLGUsfromsuchproceeds

Informationgaps,keychallenges

WiththesupportofPPEI,incoordinationwiththePH-EITI,theEnvironmentandNaturalResourcesDataManagement(ENRDMT)wasdeveloped.

ü Disclosure on receipts relating to shares in national wealth;

ü Segregation of receipts attributed to LGU code and those considered ‘sub-national payments’;

ü Enumeration of LGU expenses funded by industry collections; and

ü Enumerations of grants and donations received.

ENRDMTnowamandatoryreportingrequirementofDOFforlocaltreasurers

“It’s high time for local treasurers to

properly account for what the extractive and related sectors contribute to local

economies, and how the local communities benefit from them and from the utilization of

their natural resources.”

Carlos G. Dominguez IIISecretary of Finance

ü Online,web-basedfeaturesmakesreportingtime-boundandefficient,anddataconsolidationwillbeeasierandmoretimely

üAvailabilityofdatawillprovidecriticalsupporttosteerinvestmentdecisions,policydevelopmentandbudgetpriorities:abilitytoproperlyestimate/projectallocationsofrevenuesharesfromthenationalwealth

ü ProvidesinformationonhowLGUsspendtheirsharesfromnationalwealthandifexpenditureswereproperlyusedbasedontheactualpurposeasmandatedbylaws

üAbilitytotrackexpendituresandsectoralpriorities

Benefitsofthetool…

Movingforward…1. Bynextyear,theBLGFwouldhaveprocessedthegranular

reportsof200localgovernmentsreportingtheirdataundertheENDRMTstartingwithFY2015-FY2016reports.Thereafter,thereportswillberegularlyprovidedtoallstakeholders.

2. GovernmentiscurrentlyaddressingthroughlegislationandexecutivemechanismsonproposalsfordirectremittancetoLGUsoftheir40%sharefromnationaltaxes

www.blgf.gov.ph

Thankyou!