REPUBLIC OF THE PHILIPPINES
HOUSE OF REPRESENTATIVES
Quezon City
SEVENTEENTH CONGRESS
Third Regular Session

pane. 8019

Introduced by MAGDALO Party-List Representative
HON. GARY C. ALEJANO

EXPLANATORY NOTE

It has been every Local Government Unit's constant battle cry, since the enactment of the
Local Government Code of 1991, that they were not receiving their just share of national internal
revenue tax collection or the Internal Revenue Allotment (IRA).

Among the complaints which constitutes such demand is the non-inclusion of the tax
revenue generated from imposing value-added tax (VAT) on the goods imported into the country.
Section 284, the national government contends, only provides that LGUs receive their share from
the total collection of national internal revenue taxes, which does not include import taxes.

Imported goods, however, are already within the Philippine border afler import taxes have
already been levied, which makes any other taxes levied in addition as part of national internal
revenue tax collection. Congress must therefore make it a priority to clarify this incertitude through
legislation that revenues collected from imposing value-added tax on imported goods are actually
part of national internal revenue and by virtue of this, part of the IRA.

‘The passage of this bill would surely provide for our LGUs greater leeway to pursue
economic development and fund programs geared towards the overall improvement of their

respective constituents.

In view of the foregoing, approval of this measure is earnestly sought.

yea ey ©. ALEJANO



REPUBLIC OF THE PHILIPPINES
HOUSE OF REPRESENTATIVES
Quezon City
SEVENTEENTH CONGRESS
Third Regular Session

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Introduced by MAGDALO Party-List Representative
HON. GARY C. ALEJANO

AN ACT
TO ENHANCE THE SHARE OF LOCAL GOVERNMENT UNITS IN INTERNAL
REVENUE TAXES

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

SEC. 1. Section 284 of the Code is hereby amended to read as follows:

“SEC. 284. Allotment of Internal Revenue Taxes. - Local government units shall
have a share in the national internal revenue taxes INCLUSIVE OF VALUE ADDED
‘TAXES PAID ON IMPORTS 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
(©) On the third year and thereafter, forty percent (40%).

Provided, That in the event that the national goverment incurs an unmanageable
public sector deficit, the President of the Philippines is hereby authorized, upon the
recommendation of 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.”

SEC. 2. Repealing Clause. - All general and special laws, acts, city charters, decrees,
executive orders, proclamations and administrative regulations, or part or parts thereof which are
inconsistent with any of the provisions of this Act are hereby repealed or modified accordingly.

SEC. 3. Separability Clause. - \f, for any reason or reasons, any part of provision of this Act
shall be held unconstitutional or invalid, other parts or provisions hereof which not affected thereby

shall continue to be in full force and effect.

Section 4. Effectivity Clause. - This Act shall take effect after fifteen (15) days from its
publication in the Official Gazette or in two (2) newspaper of general circulation.

Approved,