LGPF: Welcome Remarks

Some Important Points for Discussion and Further Study Regarding the IRA
(Based on Data Presented by Dennis Lopez of the Philippine Business for Social Progress GOLD Project)

On the Devolution of Services and the Budget of Line Services

Basic services devolved to LGUs

Agricultural extension and on-site research services (DA)

Community-based forestry projects and management of community forests (DENR)

Field health and hospital services and other tertiary health services (DOH)

Public works and infrastructure projects funded out of local funds (DPWH)

School building program (DECS)

Social welfare services (DSWD)

Tourism facilities and domestic tourism promotion and development (DOT)

Telecommunication services for provinces and cities (DOTC)

Low cots housing projects for provinces and cities and other services ,e.g. investment support services, industrial research and development services.

Plus 70,512 devolved personnel: 4,127 from DSWD, 17, 692 from the DA, 895 from the DENR, and 47,798 from the DOH.

Despite such devolved functions the DA budget from Php 4.420 M in1990, before devolution, to Php 22.312 M and the DOH from Php 7.6 M to Php 12.3 M. ULAP is questioning the rise is budget despite the substantial devolution of services from these agencies.

Laws Pertinent to the Release of IRA Shares

1987 Constitution
Article X

Section 6: Local Government Units shall have a just share, as determined by law, in the national taxes which shall be automatically release to them.

Section 7. Local government Units shall be entitled to an equitable share in the proceeds of the utilization and development of the national wealth within their respective areas, in the manner provided by law, including sharing the same with the inhabitants by way of direct benefits.

The Local Government Code of 1991 Sec. 284. Allotment of Internal Revenue Taxes .-- Local government units shall have a share in the national internal revenues taxes based on the collection of the third fiscal year preceding the current fiscal year as follows…
(c) On the third year and thereafter, forty percent (40%)

[Further in the same section]
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 the 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 internal revenue allotment of local government units 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…

Sec. 285. [Allocation formula] The share of local government units in the internal revenue allotment shall be allocated in the following manner:

a) 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 the 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 internal revenue allotment of local government units 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…

a) Provinces-- Twenty-three percent (23%)
b) Cities-- Twenty-three percent (23%)
c) Municipalities-Thirty-four percent (34%)
d) Barangays-Twenty-percent (20%)

Provided, however, that the share of each province, city, and municipality shall be determined on the basis of the following formula:

a) Population-Fifty percent (50%)
b) Land Area-Twenty-five percent (25%)
c) Equal Sharing-Twenty-five percent (25%)

[for barangay shares Php 80,000 for those with a population of not less than 100 inhabitants to be taken out of the 20% share and the balance is allocated based on population (60%) and equal sharing (40%)]

Sec. 286. Automatic Release of Shares. -- (a) The share of each local government unit shall be released, without need of any further action, directly to the provincial, city, municipal or barangay treasurer, as the case may be, on a quarterly basis within five days after the end of each quarter, and which shall not be subject to any lien or holdback that may be imposed by the National Government for whatever purpose.