Congress urged to okay hike in IRA share of LGU from 40% to 60%

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THE vice chairman of the House Committee on Appropriations on Thursday asked the leadership of both houses of Congress to pass the measure increasing the internal revenue allotment (IRA) share of local government units  (LGUs) from 40 percent to 60 percent.

Rep. Luis Raymund F. Villafuerte Jr. of Camarines Sur made a statement following a landmark Supreme Court ruling enlarging the IRA share of LGUs and in support of the planned switch to a federal form of government.

House Bill (HB) 4697 aims to amend Sections 284 and 286 of the Local Government Code of 1991 to increase the current IRA of LGUs from 40 percent to 60 percent.

Once enacted into law, the proposal will increase the IRA share of LGUs to 50  percent on the first year of effectivity, 55 percent on the second year and 60 percent on the third year.

However, if the national government incurs an “unmanageable” public-sector deficit upon the effectivity of this amended IRA law, HB 4697 authorizes the President of the Philippines, upon the recommendation of the secretaries of finance, of budget and management, and of interior and local government, to make the necessary adjustments in the IRA share of LGUs; but in no case shall the amount be lower than 40 percent of all national tax earnings in the third fiscal year prior to the current one.

The bill also provides that, on top of the new IRA allotment, the LGUs’ share will include the cost of devolved functions for essential public services.

Villafuerte said the IRA provision in the Local Government Code is meant to be “an integral part of local governance and local government,” and to provide local governments with resources to fund the implementation of their respective programs in their pursuit of genuine political and financial autonomy from the national or central government
in Manila.

The bill also aims to include all types of national taxes in the computation of the annual revenues due provincial, city and municipal governments, which was already ruled upon by the Supreme Court in its landmark ruling on a separate petition filed by Batangas Gov. Hermilando Mandanas in 2012.

The Supreme Court ruled last July 4 to grant Mandanas’s petition, stating in its decision that the “just share” of LGUs from taxes must be computed and sourced from “all national taxes” and not just from the national internal revenue taxes—or collections by the Bureau of Internal Revenue (BIR)—as is currently being done.

With the approval of HB 4697, the lawmaker said LGUs could further be encouraged to support federalism and the public could be informed about how a federal setup would improve delivery of basic services and speed up the implementation of development programs at the local government level.

A recent Pulse Asia survey showed 69 percent of Filipinos have admitted they know very little about federalism.




Jovee Marie de la Cruz

Jovee Marie Dela Cruz is working as a reporter in the country's leading business newspaper the BusinessMirror since 2013.
Ms. Dela Cruz, who is in the media industry for 8 years, is currently covering the House of Representatives.
She graduated from Universidad De Manila with a degree of Bachelor of Arts in Political Science in 2008.
At present, Ms. Dela Cruz is finishing up her master's degree in communication at the Polytechnic University of the Philippines (PUP).