Beyond Business-as-Usual
Working towards a progressive local fiscal and economic administration in Muntinlupa City
Kimberly Axalan
Edited by Fidel Louis B. Ceñidoza
It is imperative that Muntinlupa City to break free from the confines of ‘business-as-usual’ fiscal practices and take proactive steps towards embracing forward-thinking local fiscal and economic governance, particularly in light of the ever-evolving challenges posed by the pandemic and the pressing need for innovative solutions to drive sustainable growth.
The usual fiscal process, designated documents, and other fiscal matters are not new to the ears when Ms. Hannah Vargas, Budget Officer of the City Government of Muntinlupa shared these during an interview with Mr. Asuncion. Key takeaways typically revolve around new knowledge provided by Ms. Vargas during the interview, particularly concerning the state of Fiscal Health and Investments of Muntinlupa City, considering the effects of the pandemic and how the local financial situation is recovering.
It is noteworthy that the Internal Revenue Allotment (IRA) dependency of the City is low at 19%, indicating that the local government operating income can stand on its own, primarily through tax collections that exceeded its yearly target of 2.1 Billion by reaching 2.3 Billion. The most significant contributor to these taxes is the Business Permit and Licensing Office (BPLO) or the business taxes, followed by the real property tax. Commendably, the City has shown strong support for developing micro, small, and medium-sized enterprises (MSMEs) through an interest-free capital lending system.
However, Ms. Vargas also points out some problems within fiscal policies, such as the application and implementation of the local revenue code and local investment and incentives code provisions, which still need to be met due to a lack of Implementing Rules and Regulations (IRR). Ms. Vargas highlights ongoing efforts to address these issues, particularly the review of the incentives code to specify requirements and included industries. This review is crucial, as it is anchored to the planning of priority areas included in the Comprehensive Land Use Plan (CLUP) and Comprehensive Development Plan (CDP) of the City, aiming to attract investments within Muntinlupa City, particularly in emerging industries such as call centers, hotels, and retail sectors, especially in the Alabang district.
While awaiting full implementation of the CLUP, the local government can explore alternatives, focusing more on MSMEs to prioritize recovery from the pandemic. The figure below highlights the 5-year economic competitiveness of Muntinlupa City from 2018 to 2022, emphasizing the importance of nurturing local economic growth, particularly through empowering and investing in MSMEs.
Muntinlupa City has the potential to enhance its performance by empowering and investing in its MSMEs over the long term and integrating them into the City’s priority initiatives outlined in its CLUP and CDP. It is always beneficial to invest in MSMEs as they continue to grow and contribute significantly to the City’s revenue generation. For instance, within the MSMEs’ food sector, the adoption of entrepreneurial marketing (EM) strategies has proven to be effective for micro-enterprises (Palmares, 2019). By implementing EM practices, small businesses are better equipped to address external factors impacting their operations, thereby enabling them to compete and sustain their market presence (Becherer and Maurer, 1997). This serves as a strong indicator for Muntinlupa City to prioritize investments in MSMEs and incorporate them into future ordinances as part of the City council’s economic recovery plans.
Regarding specific challenges faced by the City, there is a need to balance increasing population and the demand for public services with raising taxes. Ms. Vargas acknowledges the reluctance of the public to accept tax hikes, exacerbated by political factors delaying implementation. To address this challenge, a policy proposal backed by research and data could be presented to the City council to consider taxing the affluent individuals, considering the substantial wealth accumulation among the top earners even during the pandemic.
Implementing a localized wealth tax, as proposed by organizations like the Ibon Foundation, could provide significant revenue for funding projects and expanding social services. This approach aligns with recommendations from international bodies and experts for economic recovery. While Ibon Foundation believed that this tax should be imposed on a national level, Muntinlupa City LGU could potentially contextualize this on its own by looking into the rising assets of the wealthy neighborhoods in their City, and then align its own calculation to that of the Ibon Foundation’s proposal:
“At the very top are around 2,919 Filipino billionaires with some Php8.1 trillion in wealth. They comprise less than 0.003% of the population but hold 16% of the nation’s wealth. Taxing just these billionaires with a wealth tax of 1% on wealth over Php. 1 billion, 2% over Php2 billion and 3% over Php3 billion can raise some Php. 467.1 billion in revenue for the government’s social services, welfare, and other programs” (Ibon Foundation, 2021).
This idea is justifiable as the World Economic Forum (WEF), the International Monetary Fund (IMF), Democratic senators in the United States, and Nobel Prize in Economics winner Joseph Stiglitz call upon governments to impose wealth tax for the economic recovery of a country.
Furthermore, Muntinlupa City ranked 5th in the 2022 cities and municipalities competitiveness index (CMCI) compiled by the Department of Trade and Industry (DTI), indicating its status as one of the top-performing highly urbanized cities in the country. Given its consistent strong performance, it is arguable that greater attention should now be directed towards advancing the interests of the City’s residents and businesses. While the CMCI incorporates innovations, it is imperative for the City to invest in fostering local innovations through various technological advancements. Particularly, there is potential for innovation within the MSMEs sector of the City, which has been noted for its capacity to thrive independently.
Efforts to bolster MSMEs should include support for their transition to e-commerce and the enhancement of digital entrepreneurial skills, particularly in response to the accelerated shift in consumer behavior prompted by the pandemic. This can be facilitated through the implementation of a detailed business framework and training programs aimed at fostering financial literacy and social media management. Embracing e-commerce offers MSMEs the opportunity to conduct transactions online, thereby reducing capital expenses. Moreover, leveraging technology and innovation capabilities has proven to be instrumental in enhancing the resilience of MSMEs amidst the challenges posed by the pandemic (Anggadwita et al., 2021).
In conclusion, adopting a proactive and data-driven strategy is crucial for addressing the fiscal and economic hurdles encountered by Muntinlupa City, transcending the conventional notion of ‘business-as-usual.’ By prioritizing the needs of MSMEs, exploring innovative solutions, and considering progressive fiscal policies, the City can foster sustainable economic recovery and growth, ensuring the well-being of its residents and businesses alike.
References
Anggadwita, G., Martini, E., Hendayani, R., & Kamil, M. (2021). The Role of Technology and Innovation Capabilities in Achieving Business Resilience of MSMEs During Covid-19: Empirical Study. https://doi.org/10.1109/icoict52021.2021.9527464
Becherer, R. C. & Maurer, J. G. (1997). The Moderating Effect of Environmental Variables on the Entrepreneurial and Marketing Orientation of Entrepreneur-Led Firms, Entrepreneurship Theory and Practice, 22(1), 47–58.
Department of Trade and Industry. (2022). Cities and Municipalities Competitiveness. CMCI. https://cmci.dti.gov.ph/rankings-data.php?unit=Highly%20Urbanized%20Cities
Ibon Foundation. (2021, September 27). Billionaire tax can fund ayuda and health — IBON. IBON Foundation. https://www.ibon.org/wealth-tax-on-billionaires-can-fund-ayuda-and-health-ibon/
Palmares, M. R. M. (2019). The Entrepreneurial Marketing Practices of Micro-enterprises in Muntinlupa City. Ascendens Asia Journal of Multidisciplinary Research Abstracts, 3(3). https://ojs.aaresearchindex.com/index.php/AAJMRA/article/view/3075
