Press Release
November 26, 2008


Local government units are shortchanged by twenty two (22) billion pesos in their internal revenue allotment share for 2009, Senator Chiz Escudero today said

Escudero said the huge amount comes from the unaccounted 2006 reformed value added tax (RVAT) collection of the Bureau of Customs (BOC).

In 2006, the Department of Finance reported a total of P76.8 billion RVAT revenue. The amount includes the Bureau of Internal Revenue (BIR) collections of P21.46 billion and BOC collections of P55.42 billion.

By virtue of the local government code, government units shall have a share in the national internal revenue taxes based on the collection of the third fiscal year preceding the current fiscal year.

The law appropriates 40% of the total RVAT revenue for local government units. Escudero said the LGUs should be receiving for their IRA in 2009 a total of P30.72 billion from the 2006 RVAT collection.

However, in a hearing at the Senate, DOF Undersecretary Gil Beltran disclosed that the amount being shared by the government with the LGUs comes only from the BIR collection thus reducing the IRA share for 2009 to P8.5 billion.

Beltran also expressed doubt about the law already saying that the national government will share the BOC collections with the LGUs.

BIR Commissioner Sixto Esquivias in the same hearing admitted that the BOC does not submit its VAT collection to the BIR therefore they cannot report it to the Department of Budget and Management (DBM).

Department of Budget and Management Director Carmencita Delantar also confirmed that the BOC revenue collection is not reflected in the IRA computation of LGUs in the proposed budget for 2009.

"The law does not distinguish who will collect. BOC is only a collection agent of BIR. BOC as a collection body does not change the character of the VAT that it is collecting".

With the exclusion of the BOC RVAT collection from the IRA share due and owing to LGUs in 2009, the government denies them their rightful share of 22 billion pesos.

"My fear about this amount if indeed it was not included is that the national government will actually be the one to expend these balances".

Escudero said the unaccounted collection could go a long way in terms of programs that directly benefit the people like school buildings, medicines, barangay roads, food security and other immediate local concerns.

The senator also expressed doubts if this is the only unaccounted revenue that denies Filipinos of better services duly inflicted by its own government.

He said the executive should thresh with the various LGUs because the latter expressed total and absolute support for the RVAT law at that time in exchange for additional revenue appropriation.

"IRA is critical to the survival of many local governments who shoulder responsibilities for many social services. This unaccounted thus unallocated amount from BOC collection should be computed as part of government revenue that will be appropriated for 2009".

News Latest News Feed