Republic of the Philippines
HOUSE OF REPRESENTATIVES
‘Quezon City, Metro Manila

SIXTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. 1367

Introduced By: REPRESENTATIVE MAGNOLIA ROSA ANTONINO NADRES,

EXPLANATORY NOTE

Republic Act No. 7160 as amended otherwise known as the Local Government
Code of 1991 explicitly devolves awesome powers and responsibilities to local
government units pursuant to the decentralization policy embodied in the Constitution
This law not only granted local governments forty percent (40%) share from national
internal revenue taxes but also broadened their taxing powers. The framers of the Code
believed that for the decentralization policy to succeed, the devolution of powers to local
government units must be accompanied by financial requirements from the national
government

However, more than two (2) decades after the passage of this landmark
legislation, many local government units had been persistently clamoring for the
reversion to the national government of the devolved functions and responsibilities,
specifically health services. The primary reason is that the forty percent (40%) share from
national internal revenue taxes is not sufficient enough to shoulder the cost of devolved
functions and responsibilities, particularly those local government units, which belong to
lower income classifications.

It is therefore the foremost objective of this bill to increase the share of local
government units in the national internal revenue taxes from forty percent (40%) to fifty
percent (50%) fora 50-50 sharing scheme.

The approval of this important piece of legislation will effectively serve as a
conerete gesture to the persistent clamor of local governments towards ensuring the long-
felt-desired autonomy of local government units as mandated by the Constitution.

wudtags hl NADRES

Representative
Fourth District, Nueva Ecija


Republic of the Philippines
HOUSE OF REPRESENTATIVES,
Quezon City, Metro Manila

SIXTEENTH CONGRESS
First Regular Session

1367

HOUSE BILL NO.

Introduced By: REPRESENTATIVE MAGNOLIA ROSA ANTONINO NADRES

AN ACT
INCREASING THE SHARE OF LOCAL GOVERNMENT UNITS IN THE NATIONAL
INTERNAL REVENUE TAXES, FURTHER AMENDING FOR THE PURPOSE
SECTION 284 OF REPUBLIC ACT No. 7160, AS AMENDED OTHERWISE KNOWN AS
THE LOCAL GOVERNMENT CODE OF 1991

Be it enacted by the Senate and the House of Representatives
of the Philippines in Congress assembled:

SECTION 1. Section 284 of Republic Act No. 7160 as amended otherwise known as the
Local Government Code of 1991 is hereby further amended as follows:

“SECTION 284. Allotment of Internal Revenue Taxes. ~ Local government units shall
have a share in the national internal revenue taxes based on the collection of the third fiscal year
preceding the current fiscal year as follows’

(a) On the first year of the effectivity of this Code, thirty percent (30%),

(b) On the second year, thirty-five percent (35%): {and]

(c) On the third year, and {thereafter,] UNTIL DECEMBER 31, 2013 forty percent
(40%);

(d) BEGINNING JANUARY 1, 2014, AND THEREAFTER, FIFTY PERCENT
(50%):
kB Se

SEC. 2. The Department of Finance (DOF), in coordination with the Department of
Budget and Management (DBM), Department of Interior and Local Government (DILG) and the
Teagues of local govemment units shall issue the necessary rules and regulations within sixty (60)
days after the effectivity of this Act

SEC. 3. This Act shall take effect fifteen (15) days after its publication in at least two
newspapers of general circulation

Approved.