The Impact of Local Tax Policies on Budget Performance and Public Service Provision in Two Selected Municipalities

Abstract

This research aims to determine the impact of local tax policies on budget performance and public service provision in the municipalities of Nagcarlan and Rizal, Laguna, during the 2025 fiscal year. The fiscal federalism theory has been the basis and foundation of the study on public choice, budget incrementalism and aiming to assess how do tax rate structures, taxpayers' compliance and the collection efficiency influence revenue adequacy, budget utilization, and fiscal discipline. This study hypothesized that the budget utilization efficiency, revenue adequacy, and fiscal discipline have significant relationship to tax policy implementation and the quality of public services provided. A researcher made instrument was used to collect the data. It utilized a quantitative research design consists of 152 respondents comprising the local government officials, employees and taxpayers from Nagcarlan and Rizal Municipalities and a descriptive correlational research methodology to analyze the status of variables, and inferential statistics.
The research findings show that both municipalities have moderately high local tax policies and budget performance with positive correlations observed between tax administration and public service outcomes. The LGU's tax policies effectively drive budget utilization and the delivery of essential services. It is also recommended for the LGUs to include adopting digital tax collection platforms and enhancing transparency and participatory budgeting to further optimize revenue generation and service delivery.