One source of funding for sub national government is imposition of taxes. It is imposed upon individual and corporation within the territorial jurisdiction of the municipality. Local governments are funded through Internal Revenue Allotment (IRA) provided by the National Government. The purpose of the study is to assess the local revenue generation capacity of the municipality of Bongabon, Nueva Ecija in the Philippines. The paper revealed that its calculated collection efficiency is only 20.6% of the total collectibles on Real Property Tax. The average local revenue raising capacity of the municipality of Bongabon, Nueva Ecija within the period of 7 years (2011 to 2017) is only 40.9 % of the externally sourced revenue or IRA. The study concluded that the municipality of Bongabon, Nueva Ecija remains dependent on national government when it comes to funding. The study also identified various constraints to efficient tax collection while local citizens perceived the LGU capacity to collect tax negatively. More studies on tax capacity are encouraged to come up with sufficient baseline data that may serve as inputs to policy making and solve the problems of tax collection in the local level.