A House leader on Thursday sought to increase the share of provinces, cities, towns, and barangays from taxes collected by the national government.
Such share is officially called internal revenue allotment, Cagayan de Oro City Rep. Rufus Rodriguez said in filing House Bill 7430.
“At this time of a prolonged Covid 19 pandemic, more than any time in history, our LGUs 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,” said Rodriguez, chairman of the House committee on constitutional amendments.
Rodriguez’s bill amends Republic Act 7160, otherwise known as the Local Government Code, to reflect the recent ruling of the Supreme Court in the Mandanas case on IRA.
In the Mandanas ruling, the Supreme Court declared the phrase “internal revenue” in the code as “unconstitutional and ordered it deleted from the law along with other references to the same.”
“It basically ruled that all references to ‘internal revenue’ in connection with the computation of IRA are unconstitutional. The ruling therefore widened the base amounts for computing IRA,” Rodriguez said.
He added that the Department of Finance had limited the share of LGUs from national taxes to levies collected by the Bureau of Internal Revenue.
“With the high court’s ruling and the eventual enactment of Bill 7430, LGUs throughout the country will have more money for development purposes,” Rodriguez pointed out.
It was Batangas Gov. Hermilando Mandanas who had challenged the DOF’s limited interpretation of IRA.
Under the Rodriguez bill, national taxes to be used as base for computing IRA shall include but not be limited to the following:
National internal revenue taxes enumerated in Section 21 of the National Internal Revenue Code collected by the BIR and the Bureau of Customs; tariff and customs duties collected by the Bureau of Customs;
50 percent of value added taxes in the Bangsamoro Autonomous Muslim Region in Mindanao and 30 percent of all other national taxes collected in such region; 60 percent of all national taxes raised from the exploitation and development of the national wealth; 85 percent of excise taxes from locally manufactured Virginia-type cigarettes and other tobacco products and five percent of the 25-franchise tax on horse races.
Provinces will share 23 percent of IRA, cities will receive another 23 percent, towns will get 34 percent, while barangays will be allocated 20 percent.