Text Only Version.
Download this Article| Discussion | Contact Us |Back to Policy Page |Home

 

 

 


Policy Studies

A Just Share of the National Pie: Restoring the IRA Cut


Internal Revenue Allotment: Issues, Incursions and Implications

 

 

 

A Just Share of the National Pie: Restoring the I.R.A. Cut
Agustin Martin G. Rodriguez, Ph. D.

Threat and Counter Threat

As the last decade of the millenium came to a close, the issue of local government finances came to the attention of the media. The cause of this furor was the Senate Finance Committee's proposal to cut the source of the local governments' share of internal revenue by Php 30.445-Billion in order to reduce the public sector deficit. To demonstrate their opposition to this proposal, local government executives threatened to call for a work stoppage of all local government units in the country. The threat came from the Union of Local Authorities of the Philippines (ULAP), the umbrella organization that brings together local authorities from the provincial to the barangay levels. The threat from the ULAP was surprising since the leagues have not been known to openly challenge national government actions. Local executives have always supported the national government's programs and directives (worth noting is their unquestioning support of the CONCORD campaign despite its unpopularity with the greater majority), and the flexing of the muscles of their newly gained autonomy to counter national government directives is a rarity.

If the cut pushes through, it is not the first such reduction of the Internal Revenue Allocation (I.R.A.). Since local autonomy was legislated, national government has actually cut the revenue allotment of local governments in many ways. President Ramos in his last year as president held-back Php 10 billion from the I.R.A., and subsequently restored only Php 5 Billion from the cut. In most years since the Code mandated I.R.A. formula was made effective, the base for computing the I.R.A. was reduced. To date, Php 5 Billion is held back every year for the Service Equalization Fund. Local executives have complained about these cuts, but they have never reacted so passionately. Neither were there strong reactions to other acts of the national government that threatened local autonomy. Many bills are pending in Congress for the re-nationalization of many devolved services, but no strong objections from the leagues have yet been registered. Neither are there strong objections when the national government issues directives inimical to local autonomy. Examples of these are Administrative Order No. 92-267 and Department of Interior and Local Government Memorandum Circular No. 94-120 which require the approval of the DILG secretary before local officials can travel abroad. Local officials are also required to obtain approval from the DILG to purchase equipment with their 20% development fund.(DILG 1995, 1996, 1997) DILG Memo Circular No. 98-136 imposes limitations on the use of local intelligence funds with a list of allowable uses for this fund. They must also acquire the approval of the Committee on Privatization to dispose of assets (E.O. No. 12, 1998). These orders are not only a threat to autonomy but also an insult to the capacity of local executives to govern, but no protests made the newspaper headlines. Thus, the furor over the I.R.A. cut for the 2000 budget was surprising, and yet upon hearing it, many advocates of local autonomy could not help but feel that it was about time that the leagues had spoken-up to defend their autonomy.

When ULAP flexed its muscles, the national government took notice. After all, a nation-wide work stoppage from the local governments would paralyze government operations and the delivery of basic services. The first reaction of the national government to this threat was to issue a counter-threat, i.e. they threatened to file administrative cases against local executives who participated in the work stoppage. But once they realized that the ULAP was serious about the work stoppage, the national government made quick moves to appease the powerful union of local authorities. The President himself met with the ULAP leaders to ask them to call off their strike set for the third week of December with the assurance that he would talk to the members of the Bicameral Conference Committee on the 2000 General Appropriations Bill to restore the cut that the Senate Finance Committee proposed. ULAP agreed to put on hold their strike, and they waited to see if the bicameral committee could propose a reasonable solution to the I.R.A. cut issue.

 

Back to Top| Part I| Part II| Part III|Part IV

 

Barangay Governance Network| Local Governance Policy Page |Research and Advocacy