EIGIH EENTll CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES )
First Regular Session 
)
Ot l!1C
S. No.
SENATE
269
■19 
JUL-8 P2 ;35
T tE C tisrm rr f
Introduced by Senator Ralph G. Recto
AN ACT
STRENGTHENING LOCAL GOVERNMENT PARTICIPATION IN NATIONAL 
DEVELOPMENT BY INCREASING THE SHARE OF LOCAL GOVERNMENT UNITS 
IN THE NATIONAL INTEICNAL REVENUE TAXES, AMENDING FOR H IE 
PURPOSE SECTION 284 OF REPUBLIC ACT NO. 7160, OTHERWISE KNOWN AS 
THE LOCAL GOV ERNMENT CODE OF 1991
Explanatory Note
The enactment of Republic Act (R.A.) No. 7160 otherwise known as the Local 
Government Code of 1991 was a major step in instituting administrative and organizational 
refonns in our local government units (LGUs), which was highlighted by devolution and local 
autonomy. LGUs are now mandated to deliver the priority needs and basic services such as 
agricultural services, health and social welfare services, infonnation services, waste management 
and environmental protection, maintenance of roads, infrastructure facilities and tourism 
development, among others.1
As mandated in the Code, LGUs have the power to create and broaden their own sources 
of revenue coupled with the right to a just share in national taxes in order to discharge local 
powers and effectively carry out devolved functions.
The internal revenue allotment (IRA), is the share of the LGUs out of the national 
government’s overall revenue collections. The Philippines consists of 81 provinces, 145 cities, 
1,489 municipalities and 42,045 barangays.2 Since only a fraction of the 43,760 LGUs belong to 
the 1st and 2nd income classes,3 most of these LGUs depend on their share from the IRA to 
perform their devolved powers and functions. Majority of the LGUs have become dependent on 
their IRA share and fail to exert effort to generate other revenues to fund programs and projects.
Twenty-eiglit years since the enactment of the Code, most local governments have yet to 
exercise genuine autonomy from the national government. LGUs still lack the capability to 
become effective partners of the national government in national progress.
1 Eleuterio C. Duinogho. “Relevant Provisions of Local Government Code.” Comparative Study Tour on Local 
Government Administration and Management. 8 May 2006. http://pcii.org/blog/wp-
docs/Dumogho LGC Relevant Provisions.pdf
2 
DILG 
Facts 
and 
Figures. 
https://www.dilg.gov.pli/PDF File/factsFigures/dilg-facts-figures- 
2019411 35347al85e.pdf. (Accessed June 18, 2019)
3 National Statistical Coordination Board. Provincial Summary: Number of Provinces, Cities, Municipalities 
and Barangays, By Region.
http://www.nscb.gov.ph/activestats/psgc/PSA PSGC SUMMARY ASOFDEC2015.pdf


This bill seeks to promote fiscal decentralization through the amendment of Section 284 
of the Code thereby increasing LGU share in the IRA from forty percent (40%) to fifty percent 
(50%). With the increase of their share in the national taxes, local governments are expected to 
ensure efficient and effective delivery of basic services. Local governments will have increased 
capacities to allocate funds, enhance financial management, improve the perfonnance of public 
economic enterprises; and strengthen the mechanisms for transparency and accountability.
In view of the foregoing, the immediate approval of this measure is hereby requested.
/mjma


E IG in  EEINTll CONGRESS OE THE 
) 
REPI BLIC OF THE ITHLirPLNES )
First Regular Session 
)
SENATE 
s. No. 
2 6 9
Introduced by Senator Ralph G. Recto
0l liif
'19 
JUL-8 P2 -35
RECEIVcU
AN ACT
STRENGTHENING LOCAL GOVERNMENT PARTICIPATION IN NATIONAL 
DEVELOPMENT BY INCREASING THE SHARE OF LOCAL GOV ERNMENT UNITS 
IN THE NATIONAL LNTEIUNAL REVENUE TAXES, AMENDING FOR THE 
PURPOSE SECTION 284 OF REPUBLIC ACT NO. 7160, OTHERWISE KNOWN AS 
THE LOCAL GOV ERNMENT CODE OF 1991
Be it enacted by the Senate and House of Representatives of the Philippines in Congress 
assembled:
1 
SECTION 1. Section 284 of Republic Act No. 7160, otherwise known as the “Local
2 
Government Code of 1991” is hereby amended to read as follows:
3 
“Section 284. Allotment of Internal Revenue Taxes. - Local government units
4 
shall have a share OF FIFTY PERCENT (50%) in the national internal revenue taxes
5 
based on the collection of the third fiscal year preceding the current fiscal year, [as
6 
follows:
7 
(a) On the first year of the effectivity of this Code, thirty percent (30%);
8 
(b) On the second year, thirty-five percent (35%); and
9 
(c) On the third year and thereafter, forty percent (40%).]
10 
“X X X.”
11 
SEC. 2. Implementing Rules and Regulations. The Secretaries of the Department of
12 
Budget and Management and the Department of the Interior and Local Government in
13 
coordination with the Department of Finance and the Bureau of Internal Revenue, shall within
14 
ninety (90) days from the effectivity of this Act, jointly formulate and promulgate rules and
15 
regulations to implement the provisions of this Act.
16 
SEC. 3. Repealing Clause. All other laws, orders, decrees, issuances, circulars, rules and
17 
regulations or parts thereof which are inconsistent with any of the provisions of this Act are
18 
hereby repealed or modified accordingly.
19 
SEC. 4, Effectivity Clause. This Act shall take effect fifteen (15) days from the date of
20 
publication in the Official Gazette or in at least two (2) newspapers of general circulation.
Approved,