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Republic of the Philippines
HOUSE OF REPRESENTATIVES,
Quezon City

SEVENTEENTH CONGRESS
First Regular Session

HOUSE BILL No. 4082

Introduced by HON. GUS S. TAMBUNTING

EXPLANATORY NOTE

This legislation aims to provide and increase fiscal independence to the Local
Government Units (LGUs) by providing additional source of funds in the form of an
increase in its share in the national taxes.

The LGUs are the backbone of the government. They are in the forefront in
pursuing national development and progress. They are the first responders in cases
of disasters or calamities and they are also the prime movers of the executive
mandate.

Enshrined in the 1987 Constitution, Article X, Section 6 which provides that
"local government units shall have a just share, as determined by law, in the
national taxes which shall be automatically released to them.”

An increase of fifty percent (50%) would mean more funding and resources
at the grass roots level for infrastructure development, livelihood programs and
various social services.

It is in this light that the immediate passage of this bill ise

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Republic of the Philippines
HOUSE OF REPRESENTATIVES.

Quezon City

SEVENTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. 4082

Introduced by HON. GUS S. TAMBUNTING

AN ACT
PROVIDING FOR THE SHARE IN THE NATIONAL TAXES OF LOCAL
GOVERNMENT UNITS, AMENDING FOR THIS PURPOSE REPUBLIC ACT NO.
7160, OTHERWISE KNWON 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. Beginning the fiscal year following the effectivity of this Act, local
government units shall have a fifty percent (50%) share in the national taxes based
‘on the collection of the third fiscal year preceding the current fiscal year: Provided,
that in the event that the national government incurs an unmanageable public sector
deficit, the President of the Philippines is hereby authorized, upon the
recommendation of Secretary of Finance, Secretary of the 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 president of the
various leagues of the local government units, to make the necessary adjustments in
the share in the national taxes of local government units but in no case shall the
share be less than forty percent (40%) of the collection of national taxes of the third
fiscal year preceding the current fiscal year.

SECTION 2. As used in this Act:

(1) "Local Government Units" shall refer to provinces, cities, municipalities and
barangays;

(2) "National Taxes" shall refer to and include the national internal revenue taxes
collected by the Bureau of Internal Revenue and the tariffs, duties, fees, and
charges as well as the national internal revenue taxes, if any collected by the
Bureau of Customs;

(3) "National Internal Revenue Taxes" shall include the value-added tax;


SECTION 3. The share in the national taxes created under this Act of each
local government unit shall be determined following the formula provided under
Section 285 of Republic Act. No. 7160.

SECTION 4. Each local government unit shall appropriate in its annual budget
no less than twenty percent (20%) of its share in the national taxes for development
projects. Copies of the development plans of local government units shall be
furnished to the Department of Interior and Local Government.

SECTION 5. The Secretary of Finance, in consultation with the Secretary of
Budget and Management, shall promulgate the necessary rules and regulations for a
simplified disbursement scheme designed for the speedy and effective enforcement
of the provisions of this Act.

SECTION 6. Section 284 under Chapter I, Title III of Republic Act No. 7160,
and all laws, presidential decrees, executive orders, letters of instruction, rules and
regulations which are inconsistent with any of the provisions of this Act is hereby
repealed or modified accordingly.

SECTION 7. If, for any reason or reasons, any part or provision of this Act
shall be held to be unconstitutional or invalid other parts or provisions hereof which
are not affected thereby shall continue to be in full force and effect.

SECTION 8. This Act shall take effect fifteen (15) days after its complete
publication in the Official Gazette or in any newspaper of general circulation.

Approved,