(STAR) By Paolo Romero - President Arroyo will launch today a German-funded computerized taxation system project for local government units (LGUs) that is expected to increase revenues and reduce tax fraud cases.

The Integrated Taxation System (iTAX) will be launched in Dumaguete City in Negros Oriental during the first international conference dubbed “iTAX: A Milestone for Local Government Finance,” to be attended by at least 500 delegates from government agencies, international donor institutions, provincial governors, assessors, treasurers, finance experts, information technology experts, computer programmers and local government officials.

A Malacañang statement said the iTAX project is funded by the German government through the GTZ- RP-German Cooperative Fiscal Decentralization Project with Negros Oriental as the pilot project area, specifically the cities of Dumaguete and Bayawan.

“It (iTAX) is a modern computer-based tax assessment and collection system for all LGUs,” the statement said. Developed by the German experts together with Philippine programmers from Negros Oriental, the iTAX is designed according to the latest standards of computer programming.

“The concept of the iTAX integrates one Basic Datafile for Taxpayers, uniform layout for the application/programs, interlink all programs and all data available under the TIN (Tax Identification Number) /local TIN which are useful for every kind of tax or payment (using a module) common of which are real property tax, business permit, water billing, tax mapping, reports and printouts and other local taxes and charges,” the statement said.

It said program version 1.0 is already available and since September 2007, roll-out has started in the first pilot LGU.

By December 2007, the project will be expanded to nine other towns in the province.

“This (iTAX project) shall have a multiplier effect to all other cities and municipalities in Negros Oriental,” the statement said.

The software uses mostly open source products so there will be no license costs applicable. Thus, iTAX can be distributed for free to all LGUs in the Philippines, the Palace said.

Through government budget and spending under the General Appropriations Act (GAA), the national government spends money every year for local projects and administration under the Internal Revenue Allotment (IRA).

Malacañang said most LGUs have the dependency from the IRA that could reach up to 90 percent of the local budget.

Local governments, in most cases, find it difficult to mobilize their own resources, it said.

On the local scene, there is a high potential on revenues coming from local taxes like real property tax, business tax, etc. but this potential has not yet been fully utilized to meet local government targets.

Studies show that local collection rate averages just over 50 percent, which proves that nearly half of the local revenue potential cannot get activated, the Palace said.

“LGUs face daily routine work in such areas as electricity, garbage collection, real property tax, business permits, water billing, etc. and the manner by which these areas of concerns are addressed is through isolated solutions such as coming up with single systems, much paper work, manually operated, no links to others and in most cases adopts the typewriting method even if computers are available,” the statement said.

To address the situation, the Philippine and German governments decided to set up a project under the GTZ decentralization program aimed at increasing revenues for the local government. The software is owned by the Philippine and German governments under the joint cooperation project. The Philippine government has the right to use iTAX everywhere in the Philippines.

“With this development, iTAX computer-based system and the revision of business processes will now help LGUs to calculate taxes and non-taxable revenues, collect more revenues, streamline the administration, achieve more transparency in the administration, deliver a high quality service to the taxpayers, improve understanding for tax collection, reduce corruption related with local taxes, deliver clear calculation bases for budget planning and organize computer-generated Tax Mapping activities. A strong internal audit module protects the system against manipulation of the data,” the Palace statement said.

Chief News Editor: Sol Jose Vanzi

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