Local govts should retain unspent IRA, says lawmaker

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The automatic release of Internal Revenue Allotments (IRAs), including unspent allotments, to local government units (LGUs) has been proposed at the House of Representatives.

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Camarines Sur Rep. LRay Villafuerte made the proposal under his House Bill (HB) 4697, which amends Section 286 of the Local Government Code (LGC) and states that the share of each LGU will be automatically released and retained by it, without need of any further action, directly to the provincial, city, municipal or barangay (village) treasurer, as the case may be, on a quarterly basis within five days after the end of each quarter.

The bill also amends Section 284 of the LGC tin order to increase the current IRA allocation of LGUs from 40 percent to 60 percent of national tax collection, on top of the provision that the automatically released IRA will not be subject to any lien or holdback that may be imposed by the national government for whatever purpose.

“Our LGUs should stop being at the mercy of the national government. Automatically releasing and retaining their respective IRAs is a major step toward genuine autonomy, and would also best prepare the LGUs for the shift to the federal system of government,” Villafuerte said in a statement.

The existing Local Government Code does not provide for automatic LGU retention of unspent IRAs.

“HB 4697 is an excellent tool to beef up the financial backbone of LGUs as this would increase their collective IRA from the current 40 percent of national tax collections to 60 percent over a three-year period,” Villafuerte, a former Camarines Sur governor, pointed out.

Villafuerte’s proposal will increase the IRA share of LGUs to 50 percent on the first year of its effectivity, 55 percent on the second year and 60 percent on the third year since the redefined IRA will include all types of national taxes in the formulation or computation of annual revenues due provincial, city and municipal governments.

The congressman said no less than the Supreme Court has, in its Ganzon v Court of Appeals ruling, upheld the constitutional provision that local autonomy and devolution is meant to “liberate the local governments from the imperialism of Manila.”

“The swift congressional approval of HB 4697 would serve as a fitting prelude to greater devolution and local autonomy under the federal switch as envisioned by the President. This will challenge the LGUs to use the additional allocation in providing better services, creating development projects and implementing different programs to further the interests of their constituents,” Villafuerte added.

If the national government incurs an “unmanageable” public sector deficit upon the effectivity of this amended IRA law, HB 4697 authorizes the President of the Philippines, upon the recommendation of the Secretaries of Finance, Budget and Management and Interior and Local Government to make the necessary adjustments in the IRA share of LGUs, but in no case shall the amount be lower than 40 percent of all national tax earnings in the third fiscal year prior to the current one. LLANESCA T. PANTI

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