Sen. Panfilo Lacson filed Senate Bill 405, which seeks to mandate the allocation of one percent of total Value Added Tax (VAT) collections for local government unit (LGU) development projects, programs, and activities.
Also known as the proposed “Local Government Development Fund Act of 2025,” the bill aims to reduce dependence on political patronage by encouraging LGUs to pursue self-sufficiency and inclusive growth.
Only LGUs that achieve at least a 10-percent increase in VAT collection over the previous fiscal year will be eligible to receive the Local Government Development Fund (LGDF). It will be sourced from one percent of actual VAT collections as determined by the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC).
Eligibility will be certified by the Bureau of Local Government Finance (BLGF) and validated by the Department of Finance (DOF).
Funds must be used exclusively for developmental initiatives aligned with the LGUs’ approved Comprehensive Development Plans.
“These incentives are meant to encourage LGUs to streamline business operations and remove barriers for small entrepreneurs, thereby improving tax collection efficiency,” Lacson said.
“Ultimately, this will help in the realization of the elusive inclusive growth that the Filipinos all aspire for as a nation,” he added.
