PRES,
Soy

HOUSE,
sant

Anions
Republic of the Philippines

Hose of Representarsves
Quezon City, Metro Manila

Seventeenth Congress
First Regular Session

HOUSE BILL NO. 4192

Introduced By:
REP. FRANCISCO JOSE F. MATUGAS II
1% 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 said
share be “just”

Under the Local Government Code of 1991, the LGUs share in the national
internal revenue taxes is merely forty percent (40%), based on the collection of the
third fiscal year preceding the current fiscal year. After two decades of its
implementation, the said share is already deemed insufficient for local government
units, particularly those belonging to lower income classifications or lower fiscal
capacity. This, considering the enormous powers and responsibilities devolved to
them. For this reason, many LGUs have been clamoring that some devolved
functions and responsibilities, such as health services, be reassigned or transferred
back to the national government. It is thus, high time that the share of the LGUs in
internal revenue taxes be increased.

Similarly, the Constitution explicitly states that LGUs shall have a just share
in the “national taxes”. This means that LGUs have a right 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 by including,
the Value Added Tax (VAT), being collected by the Bureau of Customs
computation of internal revenue taxes.

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For these reasons, approval of this bill is earnestly sought.

FRANCISCO JOSE F. MATUGAS II


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Republic of the Philippines

House of Represencatsves
Quezon City, Metro Manila

Seventeenth Congress
First Regular Session

92

HOUSE BILL NO. 4

INTRODUCED BY REPRESENTATIVE FRANCISCO JOSE F. MATUGAS IL

AN ACT INCREASING THE SHARE OF LOCAL GOVERNMENT UNITS IN
THE NATIONAL INTERNAL REVENUE TAXES, AMENDING FOR THE
PURPOSE SECTION 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. The first paragraph of Section 284 of Republic Act No. 7160,
otherwise known as the Local Government Code of 1991, is hereby amended to read
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) On the first year of the effectivity of this Code, thirty percent
(30%);

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

(c) On the third year, [and thereafter], AND UNTIL FISCAL
YEAR 2016, forty percent (40%); [:]

(d) FOR FISCAL YEAR 2017, FIFTY PERCENT (50%);


(e) FOR FISCAL YEAR 2018 AND THEREAFTER, SIXTY
PERCENT (60%).

XXX XXX’

SEC, 2, The collections of the Bureau of Internal Revenue (BIR), including the
Value Added Tax (VAT) and excise tax on imported goods being collected by the
Bureau of Customs, shall be included in the computation of national internal
revenue taxes.

Sec. 3. The Department of Finance (DOF), in coordination with the
Department of 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

SEC. 4. Repealing Clause. All laws, presidential decrees, executive orders
presidential proclamations, issuances, rules and regulations or parts thereof which
ent with the provisions of this Act are hereby repealed or amended

are inconsis
accordingly.

SEC. 5. Effectivity Clause. This act shall take effect fifteen (15) days from its
publication in the Official Gazette or in a newspaper of general circulation.

Approved,