OVERVIEW OF THE LOCAL

FEES AND CHARGES (LFC)

TOOLKIT
KAMMELLE ANNE C. PLATA
Local Treasury Operations Officer II, BLGF Region IV-A

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OUTLINE OF PRESENTATION

I. Introduction
i. LFC Toolkit
ii. Legal Basis
iii.Significance of LFC Toolkit
iv.Rationale for the Imposition of Fees &
Charges
v.Principles of the Increase in FC/
Imposition of New Fees
vi. Scope
vii. Distinction of Fees and Charges
II. Cost Recovery Principles
I. Cost Recovery
II. Principle of Cost Recovery

D e p a r t m e n t o f F i n a n c e | B u re a u o f L o c a l G o v e r n m e n t F i n a n c e
 INTRODUCTION

D e p a r t m e n t o f F i n a n c e | B u re a u o f L o c a l G o v e r n m e n t F i n a n c e
 The Constitution grants each LGU the power to
create its own sources of revenues and to levy
INTRODUCTION taxes, fees, and charges which shall accrue for
its sole benefit.

D e p a r t m e n t o f F i n a n c e | B u re a u o f L o c a l G o v e r n m e n t F i n a n c e
WHAT IS THE LFC TOOLKIT?

The LFC Toolkit is an excel-based template

which contains the step-by-step procedure
for setting reasonable rates of fees and
charges that an LGU may impose, based
on a cost-accounting framework.

The Toolkit does not only contain

procedures but requires relevant
information and data in order to determine
reasonable amount of local fees and
charges.

D e p a r t m e n t o f F i n a n c e | B u re a u o f L o c a l G o v e r n m e n t F i n a n c e
 Sections 147, 151,153 and 186 of Republic Act 7160

To impose and collect reasonable fees and charges on

business and occupation and on the practice of any
LEGAL profession and calling commensurate with the cost of
BASIS regulation, inspection and licensing.

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 DILG – DOF Joint Memorandum Circular (JMC) No. 2019-
01, dated 17 May 2019

“Guidelines for the Review, Adjustment, Setting and/or

Adoption of Reasonable Regulatory Fees and charges
LEGAL of Local Government Units.”

BASIS ➢ The DOF, through the BLGF, shall prepare, update

and issue the necessary guidelines and advisories on
the LFC Toolkit.
➢ The BLGF issued Memorandum Circular No. 020.2019
on September 02, 2019 on the Guidelines on LFC
Toolkit.

D e p a r t m e n t o f F i n a n c e | B u re a u o f L o c a l G o v e r n m e n t F i n a n c e
 SIGNIFICANCE OF THE LFC TOOLKIT

• The LFC Toolkit shall serve as the • It promotes the importance of balancing
framework in determining and setting the cost-recovery of services rendered by
reasonable rate of fees and charges, for the LGUs as well as attracting investments,
the primary purpose of analyzing the by improving the ease of doing business,
efficient cost-recovery of regulatory to pursue local economic growth and
activities and services of the LGUs. development.

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RATIONALE FOR THE IMPOSITION
OF FEES & CHARGES

• Efficient resource management – to • Cost recovery principle – to relieve the

downsize the government’s spending and government of its funding burden
yet maintain its obligation of providing
efficient services to the public

D e p a r t m e n t o f F i n a n c e | B u re a u o f L o c a l G o v e r n m e n t F i n a n c e
 • Concept of comparability of service with other local
governments;

• Length of time the fee or charge has not been

revised;

PRINCIPLES OF THE • Some social services remain exempt from

requirement to hike fees and charges, e.g., fees
INCREASE IN FEES related to constitutionally mandated free or
AND CHARGES / subsidized services (education, health services);

IMPOSITION • Balance between cost recovery and socio-

OF NEW FEES economic impact of new/revised rates to
stakeholders

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 To all fees and charges (not taxes) being imposed by
LGUs, whether regulatory or service fees, the purpose of
which is to recover the cost of service rendered, except
SCOPE when the rate or the method for determining the rate
has already been prescribed under the Local
Government Code and other applicable laws.

D e p a r t m e n t o f F i n a n c e | B u re a u o f L o c a l G o v e r n m e n t F i n a n c e
DISTINCTION

"Tax" refers to a charge levied "Fee" refers to a charge fixed by "Charge" refers to the
by a local government on a law or ordinance for the pecuniary liability, as a rent
product, income, or activity, regulation or inspection of a imposed against a person or
the purpose of which is to business or activity. property in exchange for the
generate public revenues to use or utility of a facility or
finance public goods and service of the government.
services.

D e p a r t m e n t o f F i n a n c e | B u re a u o f L o c a l G o v e r n m e n t F i n a n c e
 COST-RECOVERY
PRINCIPLES

D e p a r t m e n t o f F i n a n c e | B u re a u o f L o c a l G o v e r n m e n t F i n a n c e
 Why is there a need to “balance”?

Reasonable fees and charges determine the competitiveness

of local government units (LGUs) for investments, otherwise:

COST • Too high - less attractive to investors

RECOVERY
• Too low - LGUs face the challenge of having to subsidize
the cost of regulation and licensing

D e p a r t m e n t o f F i n a n c e | B u re a u o f L o c a l G o v e r n m e n t F i n a n c e
 • EFFICIENCY – the fees are simple and are not cumbersome to
administer

• TRANSPARENCY – the nature and use of the service is

understood by users

• EFFECTIVENESS – the fees provide value for money for users

PRINCIPLE
OF COST • CLARITY – users are clear about when and how fees apply

RECOVERY • EQUITY – the fees are fairly applied across a range of users

• ETHICS – users with special service needs are not charged

exorbitant fees directly in accord with the cost of higher
servicing requirement

D e p a r t m e n t o f F i n a n c e | B u re a u o f L o c a l G o v e r n m e n t F i n a n c e
D e p a r t m e n t o f F i n a n c e | B u re a u o f L o c a l G o v e r n m e n t F i n a n c e
 THANK YOU!

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