[PHOTO AT LEFT CAPTION - Misguided farming policies, including land reform, are keeping millions in the Philippines poor, the World Bank has said]

MANILA, AUGUST 20, 2010, 6:40 A.M. (AFP NEWS at YAHOO!) (AFP) Ė 6 hours ago - Misguided farming policies, including land reform, are keeping millions in the Philippines poor, according to a report released by the World Bank this week.

The report said only the manufacturing and service sectors, which require huge capital and skilled workers, had grown significantly over the last decade while agriculture, which employs most of the non-skilled, faltered.

"These productivity trends reflect a growing scarcity of land and a progressive reduction in the amount of land per worker, aggravated by agrarian reform policies," the World Bank said.

The Philippines passed a land reform law in 1987 to break up large agricultural estates owned mostly by the ruling elite and give land to millions of farmhands.

Last year parliament extended the programme by five years amid widespread landlord opposition, which has kept a number of big corporate farms intact, including one controlled by the family of President Benigno Aquino.

The World Bank urged the government, among others, to set up a commission to review its current agrarian reform policy so farm land is not tied up and can be used more freely as capital.

The government says one in three people in the country of 95 million are poor, with most living in rural areas. The farm sector employed 32.5 million people in April, the latest official data available.

Productivity among Philippine farms has stagnated over 30 years due to falling investment in public infrastructure such as irrigation, as well as reduced farm sizes owing to rapid population growth, the report said.

"This decline in farm size has been intensified by agrarian reforms that have negatively affected the functioning of land markets and made access to land more difficult for small-scale farmers," it added.

The report said other policies over the period brought only short-term relief to select groups though not necessarily the rural poor.

Efforts by the Philippines, now the world's largest rice importer, to grow all of its needs merely stifled the efficient allocation of resources and hindered families from earning incomes from other farm activities, it said. Copyright © 2010 AFP. All rights reserved




MANILA, AUGUST 20, 2010 (STAR) The government is looking at local government units (LGUs) as possible source of additional revenues by reducing their dependence on Internal Revenue Allotment (IRA).

Finance Secretary Cesar Purisima said most LGUs have been overly dependent on their IRA while neglecting to exercise their own taxing powers.

He said 85 percent of the annual budget of LGUs all over the country is financed by the IRA.

"Right now, most of the local governments are dependent on their local revenue allotment. There should not be reason for that because they have their own taxing power, particularly real estate taxes," Purisima said in a speech delivered at the mid-year economic briefing in Makati City last Wednesday.

For 2010, the government has earmarked a total of P265.802 billion in IRA for LGUs.

From January to June, some P144.830 billion have already been disbursed to LGUs, which is more than half of the full-year allocation.

The remaining balance of P120. 972 billion will be released during the second semester ending December.

The finance chief said LGUs could be made less dependent on their IRA by converting them into aggressive tax collection units.

Purisima said LGUs could raise revenues from alternative sources such as real property taxes (RPT).

He said his agency is discussing with Department of Interior and Local Government (DILG) and the Bureau of Internal Revenue (BIR) on how to improve the RPT collection of LGUs.

Purisima said LGUs may adopt the BIRís system of zonal valuation in assessing the tax due of real estate assets within their jurisdiction.

"Why not adopt the Zonal Valuation for real estate taxes or some standard? So that they can increase the portion that real estate taxes contribute to their own budget," he said.

He added: "Then our liability management effort hopefully will allow us to reduce the amount of money allocated to interest amortization in the budget. Thatís something we want to aggressively do."

Purisima did not say how much IRA would be saved and repatriated back to the state coffers with his plan.

The National Tax Research Center (NTRC) of the Department of Finance (DOF) has scored LGUs for becoming so "demotivated" and dependent on IRA that they have failed to maximize their taxing powers.

Chief News Editor: Sol Jose Vanzi

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