A PROPOSED law institutionalizing the Supreme Court ruling that grants a larger share of national revenues to local governments has been filed in the House of Representatives.

House Bill No. 7430 seeks to amend the Local Government Code, under Republic Act No. 7160, particularly provisions on the basis for the computation of the Internal Revenue Allotment (IRA).

IRA is the annual fund that local governments — provincial, city, municipality — get from the national government.

It is taken from the Bureau of Internal Revenue’s (BIR) collection and computed based on the local government classification, land area, and population.

A Supreme Court decision in 2019, however, ruled that the IRA must also include other government income such as those from the Bureau of Customs and value-added tax (VAT), among others.

   The bill’s author, Cagayan de Oro Rep. Rufus B. Rodriguez, said the proposed amendments are seen to augment local funds for the implementation of COVID-19 response measures.

“At this time of a prolonged COVID-19 (coronavirus disease 2019) pandemic, our LGUs (local government units) need more funds to take care of the health and economic needs of their constituents. The resources of the LGUs are fast drying up because of this pandemic,” he said in a statement.

Under the bill, Mr. Rodriguez seeks to include in the IRA computation such items as income tax, estate and donor’s taxes, and VAT, among others enumerated under section 21 of the national tax code, as well as tariff and customs duties.

It will also cover 50% of VAT in the Bangsamoro Autonomous Region in Muslim Mindanao and 30% of all national taxes in the region;  60% of national taxes raised from national wealth development and exploitation; about 60% of government revenues from tobacco products; and 5% of the 25% franchise tax on horse races, among others.

Of the total collection, 23% will go to provinces and cities, 34% to municipalities, while barangays will get the remaining 20%.

Further, if enacted, the law will mandate LGUs to appropriate at least 20% of their annual fund for development projects. — Charmaine A. Tadalan