EIGHTEENTH CONGRESS OF THE)
REPUBLIC OF THE PHILIPPINES —_)
First Regular Session )
HOUSE OF REPRESENTATIVES

H.B.No.__3447_

Introduced by Rep. Vilma Santos-Recto
6" District of Batangas

AN ACT
STRENGTHENING LOCAL GOVERNMENT PARTICIPATION IN NATIONAL
DEVELOPMENT BY 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

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
reforms 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, information services, waste
‘management and environmental protection, maintenance of roads, infrastructure facilities and
tourism development, among others.'

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.” Since only a fraction of the 43,760 LGUs
belong to the 1" and 2 income classes,’ most of these LGUs depend on their share from the
IRA to perform their devolved powers and functions. Majority of the LGUs have become

' Bleuterio C. Dumogho. “Relevant Provisions of Local Government Code.” Comparative Study Tour on
Local Government Administration and Management. 8 May 2006. http:/pcij.org/blo;

docs/Dumogho LGC Relevant Provisions.pdf
DILG

Facts and Figures. _https:/www.dilg.gov. i ilg-t
2019411_35347a18Se.pdf. (Accessed June 18, 2019)

‘National Statistical Coordination Board. Provincial Summary: Number of Provinces, Cities,
Municipalities and Barangays, By Region.
Th v.ph/activ SA_PSGC_SUMMARY_ASOFDEC20154


dependent on their IRA share and fail to exert effort to generate other revenues to fund
programs and projects.

‘Twenty-eight 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.

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 a more efficient and effective delivery of basic services. Local
governments will have increased capacities to allocate funds, enhance financial management,
improve the performance of public economic enterprises; and strengthen the mechanisms for
transparency and accountability.

In view of the foregoing, the immediate appro



EIGHTEENTH CONGRESS OF THE)
REPUBLIC OF THE PHILIPPINES —_)
First Regular Session )
HOUSE OF REPRESENTATIVES

H. B. No. 3447

Introduced by Rep. Vilma Santos-Recto
6" District of Batangas

AN ACT
STRENGTHENING LOCAL GOVERNMENT PARTICIPATION IN NATIONAL
DEVELOPMENT BY 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 House of Representatives of the Philippines in
Congress assembled:

SECTION 1. 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 OF FIFTY PERCENT (50%) 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%).]

PSO Si)

SEC. 2. Implementing Rules and Regulations. The Secretaries of the Department of
Budget and Management and the Department of the Interior and Local Government in
coordination with the Department of Finance and the Bureau of Internal Revenue, shall
within ninety (90) days from the effectivity of this Act, jointly formulate and promulgate
rules and regulations to implement the provisions of this Act.

SEC. 3. Repealing Clause. All other laws, orders, decrees, issuances, circulars, rules
and regulations or parts thereof which are inconsistent with any of the provisions of this Act
are hereby repealed or modified accordingly.


19 SEC. 4. Effectivity Clause. This Act shall take effect fifteen (15) days from the date
20 of publication in the Official Gazette or in at least two (2) newspapers of general circulation.
Approved,