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FULLY automated business permits and licensing systems (BPLS) are helping increase revenues across local government units (LGUs), but challenges, including infrastructure and functionality gaps, hinder the shift, a study showed.

The Philippine Institute for Development Studies (PIDS) said that LGUs with fully automated BPLS saw an 18.16% increase in local business tax revenue growth.

This surge in revenue is accompanied by a 0.48 increase in the index of active establishments among LGUs with fully automated BPLS, suggesting that ease of registration is successfully drawing more businesses into the formal economy.

According to the report, revenue growth is being driven by increased accuracy, reduced evasion, and enhanced data integration.

As automated systems use built-in tax formulas to generate computations, they remove manual error and retrieval times that lead to under-taxation or delays.

The shift to e-filing and e-payments also reduces face-to-face interactions that provide opportunities for discretionary negotiations.

Meanwhile, a shared database among departments allows the City Assessor’s Office to verify if businesses are making proper property declarations.

“The impact of fully automated BPLS on LGU revenue generation is becoming apparent. Fully automated BPLS is positively associated with local business tax revenue growth and business registrations,” the PIDS said.

Despite the benefits, the shift remains uneven. The PIDS reported that only 40%, or 54 out of 138 cities, have achieved full automation, most of which are in the National Capital Region and Calabarzon.

“There are several challenges to e-governance efforts from LGU experience. The issues relate to the lack of funds, information and communications technology (ICT) infrastructure, and human capital; lack of willingness among stakeholders; and lack of functionality,” it said.

To bridge the gaps, the PIDS said that LGUs must invest in developing a secure portal and in training staff for ICT use and maintenance.

“Having a fully automated BPLS involves coverage of end-to-end process, not only providing an online application and payment system but also ensuring the integration of regulatory offices that are embedded in the process of obtaining permits or licenses,” it said.

On human resources, the PIDS said that plantilla ICT positions should be created.

“LGU staff should regularly be trained by the ICT Academy to update their skills in line with their functions,” it added.

LGUs are also being urged to have vulnerability assessment and penetration testing prior to implementation and an annual risk and security assessment as required for Critical Information Infrastructure under the E-Governance Act.

“Some LGUs have been conducting the vulnerability assessment and penetration testing already to assess susceptibility to attacks, and such efforts should be maintained,” it added. — Justine Irish D. Tabile

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