130 Chasing the Wind: Assessing Philippine Democracy, Second Edition (T)he framework that supports the scal provisions of the Code is of martial law vintage. The taxing powers that LGUs enjoy are those that they have been enjoying since 1973. The tax bases have remained the same…The real property tax, which is expected to bring in the revenues to LGUs, is acknowledged as an expensive and a difcult tax to levy…Estimates show that many LGUs spend more to collect a peso of the tax…The grant system is also of martial law vintage. The differences in the pre- and post- devolution IRA structure are marginal.17 Additionally, Guevara notes the grant system under the LGC “cannot be expected to be an equalizer. It has even introduced perverse incentives for LGUs to split themselves or to convert into cities to receive additional IRA.” In fact, from the time that the LGC was passed, new provinces, municipalities and barangays have been created, and more municipalities have been converted into cities.18 Going back to Guevara's observation about tax bases, this point is noteworthy as it surfaces a possible reason for one post-decentralization reality, of LGUs that remain dependent on IRA as the primary source of their income. As Manasan (2009) also points out, the LGC connes the amount of resources that could be generated as it seriously limits their power to set tax rates, with oors and ceilings dened for every tax that the local government units could collect.19 Working with available data on income and expenditures from 2009 to 2014,20 one would quickly see that provinces, cities and municipalities have yet to generate a signicant proportion of their income from local sources, as much of the revenues of LGUs are drawn from the IRA. Table 8. Internal Revenue Allotment Dependency While many LGUs have failed to generate income due to the dismal level of economic development of their localities, there is some evidence to support the claim that the unconditional IRA grants has led to complacency on the part of LGU leaders as they are not compelled to generate additional resources and can just limit spending to what they draw as their IRA share. Manasan found out that LGUs do not tend to fully utilize the tax powers assigned to them with many provinces and cities revising the schedule of the market values of real property in their jurisdiction only once since 1991. (Manasan 2009) Another explanation that could be offered for the low proportion of locally sourced income is the ypaper effect, or simply the phenomenon where literally, “money sticks where it hits.” (BLGF 2008). In a study, the Bureau of Local Government Finance (BLGF 2008) notes that while there has been no