SENATOR Juan Edgardo M. Angara has filed bills seeking to reform the present Republic Act No. 7160 or the Local Government Code, including measures to include the local government share of some revenue generated by value-added tax (VAT).
Among them is Senate Bill No. 1788, which aims to increase the source of funds given to local government units (LGUs) by including in the computation of internal revenue allotment (IRA) the VAT paid on imported goods collected by the Bureau of Customs (BoC).
In a statement, Mr. Angara, chair of the Senate committee on local government, said LGUs should have enough power and funds to combat crime and illegal drugs in order to ensure public safety.
He also said the bills were the result of the committee’s public consultations in reviewing the Local Government Code, which remains unchanged since its enactment in 1991.
“These measures will enable our LGUs to effectively perform their duties as frontliners to their constituents. Results from our consultations show that many local government(s) do not have enough funds to implement their programs,” he said in a statement on Thursday.
Aside from Mr. Angara’s bill, Senate President Pro Tempore Ralph G. Recto and Senator Aquilino L. Pimentel III have filed bills that will increase the IRA of LGUs from the current 40% to a 50% share.
Under the current system, LGUs are given 40% share of the country’s internal revenue. LGUs can also collect local taxes and fees or could seek grants and contract loans with any domestic private bank and lending institutions.
While senators introduced reforms for LGUs through legislation, the Constitutional Commission to review the 1987 Constitution is considering including government revenue-sharing provisions in its proposed federal Charter, setting the share to 50%-50% between the national government and federated regions.
“In one of provisions, the sharing was 50-50 for the federal and the local levels on certain income tax collected including — because currently the 60-40 is only on income tax but (Bureau of) Customs taxes, and other taxes are not included. So what we are proposing today is a 50-50 share and again aside from the (income tax) revenue share of LGU, out of the Customs tax collection, 50% will be given to federated regions,” Commission member Eddie M. Alih said during briefing at the Philippine International Convention Center (PICC) in Pasay City.
Mr. Alih discussed the proposed reforms for LGUs after he recounted the concerns raised over LGUs losing their powers under the proposed federal government during their regional consultations. He said the shift to federalism was meant to empower the federated regions, a process which includes giving the LGUs more powers to generate revenue and greater allocations from the IRA.
“We are not thinking of shifting to federalism for the good of the central government. This is for the good of the regional government. This is to address inequality of growth of all the regions today,” he said.
Commission member Susan U. Ubalde-Ordinario also said the consultative body is also discussing transferring the revenue from documentary stamp tax from the national government to the federated regions.
Asked if the proposals of ConCom for LGUs will require amending the LGC once the new Charter is in place, Ms. Ordinario said the law will have been superseded by the new Constitution. She said the Administrative Code of the Philippines will also need amendment.
“This is because the relationships of government agencies and their structures will be affected. But that is now going to be up to the Transition Commission,” she said. — Camille A. Aguinaldo
