Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City
FIFTEENTH CONGRESS
First Regular Session

HousEBELNo._ 1255

Introduced by the Honorable Nur G. Jaafar

EXPLANATORY NOTE

The bill seeks to rationalize the computation of the Internal Revenue Allotment
(IRA) to local government units by looking into the IRA distribution formula under RA
No, 7160. It is proposed that the share of each province, city and municipality shall be
determined on the basis of population and poverty incidence. The bill also aims to do
away with the factor on “equal sharing’ because the ‘equity objective’ of the Internal
Revenue Allotment does not realize the full intent of the law. The developed areas
become more developed while those which need more help continue to lag behind

If the factor on poverty incidence. instead of land area and equal sharing, will be
considered to compute for IRA shares of LGUs, poorer provinces, cities, municipalities
and barangays will get bigger IRA shares. With this formula, the real intent of the Local
Government Code can be achieved

Approval of this bill is earnestly requested


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City
FIFTEENTH CONGRESS

First Regular Session

HOUSE BILL NO. 1255

Introduced by the Honorable Nur G. Jaafar

ACT

RATIONALIZING THE COMPUTATION OF THE INTERNAL RE’
ALLOTMENT TO LOCAL GOVERNMENT UNITS (LGUs), AMENDING FOR 1
PURPOSE SECTION 285 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 I, Section 285 and 286 of Republic Act No, 7160 are hereby
amended as follows:

“Sec. 285. Allocation to Local Government Units. ~ The share of local
government units in the internal revenue allotment shall be allocated in the
following manner

(a) Provinces ~ Twenty-three percent (23%);

(b) Cities ~ Twenty-three percent (23%);

(©) Municipalities — [Thirty-four percent (34%)] THIRTY PERCENT
(30%), and

(d) Barangays — [Twenty percent (20%)] TWENTY-FOUR PERCENT.
(24%),

Provided, however, That the share of each province, city and municipality shall
be determined on the basis of the following formula:


(a) Population — Fifty-percent (50%); and
(b) [Land Area — Twenty-five percent (25%); and POVERTY
INCIDENCE (50%);

(©) [Equal sharing ~ Twenty-five percent (25%)};

Provided, further, That the share of each barangay with a population of not less
than one hundred (100) inhabitants shall not be less than Eighty Thousand Pesos
(P80,000.00) per annum chargeable against the twenty percent (20%) share of the
barangay from the internal revenue allotment, and the balance to be allocated on the
basis of the following formula:

(a) XXX
(b) XXX
(c) On the third year and thereafter;
(1) Population — Sixty percent (60%); and
(2) [Equal Sharing] POVERTY INCIDENCE - Forty percent (40%);
Provided, finally, That the financial requirements of barangays created by local
government units after the effectivity of this Code shall be the responsibility of the local

government unit concerned.”

SECTION 2. Alll laws, executive orders, rules, regulations and other issuances
inconsistent with this Act are hereby repealed or modified accordingly

SECTION 3. This Act shall take effect immediately upon its approval

Approved