Recto: Pay hikes hinge on local share of taxes

SENATE President Pro-Tempore Ralph Recto on Sunday warned that thousands of government employees won’t be able to fully enjoy the pay hikes recently ordered by Malacañang unless the share of barangays, towns, cities and provinces from national tax collections will be increased.

He said the country’s 1,490 towns spent almost 40 percent of their combined operating income of P146.2 billion two years ago on salaries.

“Their payroll expense of P58.3 billion in 2014 was half of the P114.9 billion Internal Revenue Allotment [IRA] they got from the government that year,” he said.

Sen. Ralph Recto
IRA refers to the 40-percent share of local government units  from the national government’s internal revenue collection.

Recto wants the LGUs’ share raised to 50 percent “under an equal 50-50 split” with the national government.

He is also batting for the inclusion of the taxes collected by the Bureau of Customs (BoC) in the computation of revenues, which will be plowed back to the 81 provinces, 114 cities, 1,490 municipalities and 42,028 barangays.

He said in 2013 and 2014, BoC collected P526 billion in what are clearly internal revenues.

“Because these were not factored in reckoning the IRA, the LGUs were denied P207 billion in lawful share,” he said.

“In taxes on oil alone, LGUs lost about P60 billion in those two years. These are taxes ultimately paid by LGU residents,” Recto said.

The Local Government Code provides that the LGUs shall have a 40-percent share from the national government’s internal revenue collection.

The 40-percent share of the LGUs is distributed as follows: 23 percent for provinces, 23 percent for cities, 34 percent for municipalities, and 20 percent for the barangays.

For 2016, the IRA of LGUs will reach P428.6 billion, based on tax collected three years before.

Recto is proposing that the IRA be based on taxes collected two years from the current year. “It is unfair for LGUs to wait for three years before they can get their dividends.”

The senator said raising the IRA is the only way for local governments to meet the financial cost of the Salary Standardization Law IV, which President Benigno Aquino effected through Executive Order 201 on Feb. 19 and other non-salary challenges, like garbage collection and peace order.

“The EO itself already limits how much in additional pay LGUs can grant their workers,” Recto said.

“Under EO 201, 4th class towns are only allowed to grant an increase equivalent to 80 percent of what is prescribed in EO 201. Employees of 6th class towns are only entitled to a maximum of 65 percent,” Recto said.

“Under SSL IV, a Nurse 1 will be getting P19,077 a month this year. But if you are a nurse in a 6th class town, it is possible that you’ll only get P12,400 a month when you are doing the same job that a nurse does in a big government hospital,” Recto said.

There is a need for LGUs employees and national government employees to have parity in pay and enjoy the same benefits, the senator added.

Topics: Ralph Recto , pay hikes , national tax collections
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