Press Release
August 23, 2009

CHIZ WANTS INCREASE, AUTOMATIC RELEASE OF IRA OF LGUs

Opposition Sen. Chiz Escudero yesterday called for an increase and the automatic release of the Internal Revenue Allotment (IRA) of local government units (LGUs) to boost funding for job and income generation programs for their communities.

In Senate Bill 3381, Escudero also proposed a penalty of six percent interest per year on the unremitted portion of the IRA against the national government to discourage any delay in the release of the much-needed funds.

"The law provides for local government units to get their rightful share of the taxes and other revenues the national government collects or generates, thus ensuring provinces, cities, towns and barangays a specific amount to fund their operations," Escudero said.

The 39-year old lawmaker said the measure will augment the current share of LGUs in the national internal revenue taxes on the basis of a new formula, using the current share of 40 percent as provided under the local government code.

The bill seeks to augment this by an additional 50 percent of the difference between the tax collections of the third and second fiscal years preceding the current fiscal year.

For example, if the total national revenue collection for 2007 is P800 billion and for 2008 is P900 billion, another P50 billion will be added to the 40 percent IRA of LGUs under the current fiscal year.

The resulting IRA will then be remitted to different provinces, cities and municipalities in shares that correspond to their income, land area and population.

Escudero also protects LGUs having difficulty raising revenues by providing that regardless of the collections made, it will continue to receive 40 percent of its IRA share.

"Instead of penalizing the poor LGUs, we should ensure adequate support for its constituents," he said.

Escudero said one salient provision of the bill is that it commands LGUs that 10 percent of the IRA it will be getting from the national budget should be solely devoted to programs and projects concerning jobs, income generation and livelihood.

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