Cities that have fully digitized business permitting are collecting significantly more local business taxes than those still relying on paper-based processes, adding fresh evidence that digital government can directly strengthen local economies.
A new study by the Philippine Institute for Development Studies (PIDS) found that cities with fully automated Business Permits and Licensing Systems (BPLS) recorded business tax revenue growth that was 18.16 percentage points higher than cities that have yet to complete their digital transition.
The findings suggest that e-governance is doing more than making transactions faster. It is also helping local governments expand their tax base while making it easier for businesses to comply with regulations.
Researchers Tatum Ramos and Marife Ballesteros examined data from 138 Philippine cities and found that fully automated permitting systems were also associated with a higher number of active business establishments, indicating that simpler, more convenient licensing processes can encourage entrepreneurship and business expansion.
Under a fully automated BPLS, entrepreneurs can apply for permits online, pay through banks or e-wallets, receive electronic official receipts, and in some cases obtain permits digitally or through courier delivery. Cities including Caloocan, Makati, Quezon City and Valenzuela have already adopted these features, reducing paperwork, processing time and repeated trips to city halls.
According to the study, digital permitting improves tax administration by accelerating application processing, strengthening data management and enhancing revenue collection while lowering compliance costs for businesses.
The researchers, however, cautioned that many local governments continue to face hurdles in digital transformation, including weak information and communications technology infrastructure, limited funding, shortages of technical personnel, organizational resistance and a continued preference among some taxpayers for face-to-face transactions.
To unlock the full benefits of e-governance, the study urged the government to invest further in digital infrastructure, strengthen the technical capabilities of local governments, integrate local systems with the Department of Information and Communications Technology’s eLGU platform, and accelerate the implementation of the E-Governance Act.
For local governments, the message is increasingly clear: digitizing business permits is not simply a governance upgrade. It is also a practical strategy for expanding revenues while creating a more business-friendly environment.
