SIXTEENTH CONGRESS )
OF THE REPUBLIC OF THE PHILIPPINES)
First Regular Session )

HOUSE OF REPRESENTATIV!
House Bill No.__184'7

Introduced by Representative Ben P, Evardone
Lone District, Eastern Samar

EXPLANATORY NOTE

‘The share of local government units (LGUs) from national taxes is mandated under
Section 6, Article X of the Constitution which provides that LGUs shall have a just share, as
determined by law, in the national taxes which shall be automatically released to them. ‘The
carmarking is intended, among others, to augment local resources to ensure that the minimum
level of basic services is delivered to the LGUs’ constituents. Under the Local Government
Code (LGC), LGUs are given shares from national tax revenues in the form of Internal
Revenue Allotment (IRA) and proceeds from the utilization and development of national
wealth. Additionally, revenues from other national taxes are shared with some LGUs under
special laws, such as a share from the value added tax (VAT), share from excise taxes on
locally-manufactured Virginia-type cigarettes and share from the income eared of
businesses and enterprises located within the ecozones.

To fully facilitate for fiscal autonomy in the local level, this bill seeks to set forth
amendments to Sections 284 and 286 of R.A. 7160, otherwise known as the Local
Government Code (LGC) of 1991.

‘The Internal Revenue Allotment (IRA) of local governments has been the lifeblood of
many of them as far as operations at the local level is concerned. On average, the IRA already
accounts for 65% of the total income of LGUs. This makes the IRA their biggest revenue
source. Needless to say, local executives highly rely on their IRA share in order to provide
the necessary basic public services for their constituents.

Once enacted, this bill would spell out the entitlement of the Local Government Units
(LGUs) to 40% of the national taxes, not just the national internal revenue taxes. The
expansion of their share to cover the national taxes as a whole, would translate to improved
delivery of basic services and opportunities to their constituents.

BENEVARDO!

Hence, approval of this bill is earnestly sought.



SIXTEENTH CONGRESS )
OF THE REPUBLIC OF THE PHILIPPINES )
First Regular Session )

HOUSE OF REPRESENTATIVES
‘House Bill No. 2

Introduced by Representative Ben P. Evardone
Lone District, Eastern Samar

AN ACT
AMENDING SECTIONS 284 AND 286 OF REPUBLIC ACT 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:

CTION 1, Section 284 of RA 7160 is hereby amended to read as follows:

“Section 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] 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

(© 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 Philippines is hereby authorized, upon the recommendation of
Secretary 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 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
for essential public services, be entitled to receive the amount equivalent to the
cost of devolved personal services.”

SECTION 2. Section 286 of RA 7160 is hereby amended and shall read as follows:

“Section 286. Automatic Release of Shares. - (a) The share of each local government
unit IS CONSIDERED OBLIGATED AND IT shall be released, without need of any

£


it further action, [directly to] BY the provincial, city, municipal or barangay treasurer, as the
4 case may be, on a MONTHLY OR quarterly basis within five (5) days after the end of each
3 MONTH OR quarter, and which shall be subject to any lien or holdback that may be
4 imposed by the national government for whatever purpose.

5

6 (B) SAID SHARE shall not be subject to any lien or holdback that may be imposed by the
7 [National] CENTRAL Government for whatever purpose.

8

9 [(b)] (©) Nothing in this Chapter shall be understood to diminish the share of local
10 government units under existing laws,
1
12 SECTION 3. All laws, decrees, executive orders, proclamations, rules and regulations, or

13 parts thereof inconsistent herewith are hereby repealed or modified accordingly.

15 SECTION 4. Separability Clause. — If any provision of this Act is held invalid or
16 unconstitutional, the other provisions not affected hereby shall remain valid and subsisting.
7

18 SECTION 5. This Act shall take effect fifteen (15) days after its publication in at least two
19 (2) national newspapers of general circulation,

20

21 Approved,