Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
First Regular Session

House Bill No,__2619

Introduced by:
REP. FRANCISCO T. MATUGAS
15' District, Surigao del Norte (Siargao Island)

EXPLANATORY NOTE

Article X Section 6 of the Philippine Constitution provides that
“local government units (LGUs) shall have a just share, as determined by
law, in the national taxes which shall be automatically released to
them". It is therefore mandated that LGUs receive not just a share in the
national taxes but that the percentage of its share must be considered
“just".

The LGUs share forty percent (40%) of the national revenue taxes
based on the collection of the third fiscal year preceding the current
fiscal year pursuant to the provisions of the Local Government Code of
1991. However, after two decades from its implementation, the said
share is deemed insufficient for local government units, particularly those
belonging to lower income classifications or lower fiscal capacity,
considering the enormous powers and responsibilities devolved to them.
This is why, many LGUs have been clamoring for some devolved
functions and responsibilities such as health services to be reassigned or
transferred back to the national government.

The Constitution also explicitly states that the LGUs shall have a just
share in the “national taxes". This means that the LGUs have a tight to
taxes collected by the national government other than the internal
revenue taxes collected by BIR. Therefore, this bill seeks to increase the
share of local government units in the national internal revenue taxes,
including the Value Added Tax (VAT) being collected by the Bureau of
Customs, from forty percent (40%) to sixty percent (60%).

For these reasons, approval of this bill is earn€stly shught.

FRANCISCO T. MATUGAS



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
First Regular Session

House Bill No.__2619

Introduced by:
REP. FRANCISCO T. MATUGAS

15' District, Surigao del Norte (Siargao Island)

AN ACT INCREASING THE SHARE OF LOCAL GOVERNMENT UNITS IN
THE NATIONAL INTERNAL REVENUE TAXES, AMENDING FOR THE
PURPOSE SECTIONS 284 OF REPUBLIC ACT NO. 7160 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 otherwise
known as the Local Government Code of 1991 is hereby 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
current fiscal year as follows:

(a)

(b)
(c)

(d)

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

On the second year, thirty-five (35%); [and]

On the third year, [and thereafter], UNTIL
DECEMBER 31, 2014, forty percent (40%); [:]

FROM JANUARY 1 TO DECEMBER 31, 2015, FIFTY
PERCENT (50%)


(e) BEGINNING JANUARY 1, 2016 AND THEREAFTER,
SIXTY PERCENT (60%)

XXX XXX

SECTION 2. The collections of the Bureau of Internal Revenue
(BIR), including the Value Added Tax (VAT) being collected by the
Bureau of Customs, shall be included in the computation of
national internal revenue taxes.

SECTION 3. The Department of Finance (DOF), in coordination
with the Budget and Management (DBM), Department of Interior
and Local Government (DILG) and the leagues of local
government units shall issue the necessary rules and regulations
within sixty (60) days after the effectivity of this Act.

SECTION 4. This Act shall take effect fifteen (15) days following
the completion of its publication in the Official Gazette or in two (2)
national newspapers of general circulation.

Approved,