Republic of the Philippines
HOUSE OF REPRESENTATIVES
Constitution Hills, Quezon City

FIFTEENTH CONGRESS
First Regular Session

1493

HOUSE BILL NO.

Introduced by: REP. MEL SENEN S. SARMIENTO

EXPLANATORY NOTE.

‘This legislative measure seeks to amend Sections 284 and 286 of Republic Act 7160,
otherwise known as the Local Government Code of 1991,

The internal revenue allotment (IRA) is used by local government units for
operational expenses and delivery of basic services. This has been the lifeblood of many of
them as far as operations at the local level are concerned. Presently, 40% of the local taxes
collected by the Bureau of Internal Revenue becomes the IRA allocated to the LGUs.
However, this has not been enough to promote real development at the local level.

This measure seeks to amend this. Under this proposed bill, the local government
units will be entitled to a forty percent (40%) share of the national taxes and internal revenue
combined, This is consistent with the mandate under Article X, Section 6 of the 1987
Constitution that “Local government units shall have a just share, as determined by law, in
the national taxes which shall be automatically released to them.”

By broadening the share of local governments to go beyond internal revenue and to
include all taxes further promotes and enhances local financial autonomy.

The approval of this bill is therefore earnestly requested.

MEL a

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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Constitution Hills, Quezon City

FIFTEENTH CONGRESS
First Regular Session

nouse pitino. 1493

Introduced by: REP. MEL SENEN S. SARMIENTO

AN ACT
g INS 284 OF REPUBLIC ACT 7160, OTHERWISE
THE LOCAL GOVERNMENT CODE OF 1991

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

SECTION I. Section 284 of RA 7160 is hereby amended and shall read as follows:

Seetion 284. (Allotment) SHARE of (Internal Revenue)
NATIONAL taxes. UPON APPROVAL OF THIS CODE, AS AMENDED,
(L) local government units (shall have a) ARE ENTITLED TO A FORTY
PERCENT (40%) share (in the) OF 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, forty percent (40%). Provided, That in the
event that the national government incurs an unmanageable public sector deficit, the

President of the Phili

es is hereby authorized, upon the recommendation of
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Secretary of Finance, Secretary of Interior and Local Government and Secretary of
Budget and Management, and subject to consultation with the presiding officers of
both Houses of Congress and the presidents of the liga, to make the necessary
adjustments in the internal revenue allotment of local government units but in no case
shall the allotment be less than thirty percent (30%) of the collection of national
internal revenue taxes of the third fiscal year preceding the current fiscal year:
Provided, further ‘That in the first year of the effectivity of this Code, the local
government units shall, in addition to the thirty percent (30%) internal revenue
allotment which shall include the cost of devolved functions for essential public
services, be entitled to receive the amount equivalent to the cost of devolved personal

services.)
SECTION 2. Repealing Clause, ~ All laws, decrees, executive orders, proclamations, rules
and regulations, or parts thereof inconsistent herewith are hereby repealed or modified

accordingly.

SECTION 3. Separability Clause. - If any provision of this Act is held invalid or

unconstitutional, the other provisions not affected hereby shall remain valid and subsisting.

SECTION 4. Effectivity Clause. - This Act shall take effect fifteen (15) days after its

publication in at least two (2) national newspapers of general circulation

Approved,

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