FIFTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
Second Regular Session 
) 
) 
) 
SENAT2987 
S.No. __ ~ 
'11 
DCT 1 () f'? :11 
Introduced by Sen. Aquilino "Koko" L. Pimentel III 
EXPLANATORY NOTE 
Article X Section 6 of the 1987 Constitution provides that "Local government units 
shall have a just share, as determined by law, in the national taxes which shall be 
automatically released to them." RA 7160 otherwise known as the "Local Government 
Code of 1991," used the term, "national internal revenue taxes" which is not in line with 
the mandate of the Constitution since it is different from what is actually stated. 
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. The IRA shares, as 
contemplated in the proposed amendments, are enhanced and broadened to include 
sharing in national taxes. Broadening the share of local governments to go beyond 
national taxes collected by the Bureau of Internal Revenue and to include all taxes, is 
one of the amendments being proposed. 
This bill seeks to amend Sections 284 of Republic Act 7160, otherwise known as the 
Local Government Code of 1991 on Allotment of Internal Revenue Taxes. 
Under this proposed measure, the local government units will be entitled to a fifty 
percent (50%) share of national taxes, instead of just forty percent (40%) of internal 
revenues. 
This is consistent with the promotion and enhancement of local fiscal 
autonomy and will transl"te into more dynamic local government units especially in the 
area of development of the local communities. 
It is, thus, prayed that the bill would meet the expeditious approval of this Chamber. 
~, V,.~v-
AQ6~,I~O "kOKO" L. PIMENTEL, III 


FIFTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
Second Regular Session 
) 
) 
) 
SENAT2987 
S.No. __ _ 
Introduced by Sen. Aquilino "Koko" L. Pimentel III 
AN ACT INCREASING THE SHARE OF LOCAL GOVERNMENT UNITS 
FROM 40% OF THE NATIONAL INTERNAL REVENUE TAXES TO 50% SHARE 
IN ALL NATIONAL TAXES, TO INCLUDE ALL THE NATIONAL TAXES 
COLLECTED BY THE BUREAU OF INTERNAL REVENUE, BUREAU OF 
CUSTOMS, PHILIPPINE PORTS AUTHORITY, DEPARTMENT OF 
ENVIRONMENT AND NATURAL RESOURCES, THE DEPARTMENT OF 
FOREIGN AFFAIRS AND SUCH OTHER GOVERNMENT AGENCIES 
DEPUTIZED BY THE BUREAU OF INTERNAL REVENUE TO COLLECT 
NATIONAL TAXES, AMENDING FOR THIS PURPOSE SECTION 284 OF 
REPUBLIC ACT 7160, OTHERWISE KNOWN AS THE LOCAL GOVERNMENT 
CODE OF 1991 
Be it enacted in the Senate and House of Representatives of the Philippines in Congress 
assembled: 
SECTION 1. Section 284 of Republic Act No. 7160 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 third fiscal year preceding the current fiscal year as follows: 
(a) 
xxxxxx 
(b) 
xxxxxx 
(c) 
xxxxxxxxx 1 
BEGINNING THE CALENDAR YEAR FOLLOWING THE EFFECTIVITY OF 
THIS ACT, LOCAL GOVERNMENT UNITS SHALL HAVE A FIFTY PERCENT 
(50%) SHARE IN ALL THE NATIONAL TAXES BASED ON THE COLLECTION 
OF THE THIRD FISCAL YEAR PRECEDING THE CURRENT FISCAL YEAR, 
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 of 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 shares of local government units in the proceeds of national 


taxes 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 year 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 public services, be 
entitled to receive the amount equivalent to the cost of devolved personal services.] 
AS USED IN THIS ACT, THE TERM, "NATIONAL TAXES" SHALL INCLUDE, 
BUT NOT LIMITED TO, TAXES, TARIFFS, DUES, AND FEES COLLECTED BY 
THE BUREAU 
OF 
INTERNAL REVENUE, 
BUREAU 
OF 
CUSTOMS, 
PHILIPPINE PORTS AUTHORITY, DEPARTMENT OF ENVIRONMENT AND 
NATURAL RESOURCES, THE DEPARTMENT OF FOREIGN AFFAIRS, AND 
SUCH OTHER GOVERNMENT AGENCIES DEPUTIZED BY THE BUREAU OF 
INTERNAL REVENUE TO COLLECT NATIONAL TAXES. 
SECTION 2. Repealing Clause. - All laws, presidential decrees, executive orders, letters 
of instruction, rules and regulations which are inconsistent with any of the provisions of 
this Act are hereby repealed or modified accordingly; 
SECTION 3. Effectivity Clause. - This Act shall take effect fifteen (15) days after the 
completion of its publication in the Official Gazette or in any newspaper of general 
circulation. 
Approved,