P200-M incentive for highly urbanized areas

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CITIES and provinces that wish to be classified as highly urbanized should work doubly hard after Congress on second reading approved a proposal that would require annual incomes of P180 million and P200 million, respectively to earn that distinction.

In approving House Bill 5021 that seeks to amend the 1991 Local Government Code (LGC), lawmakers now want to raise the income for would-be highly urbanized cities from P50 million to P180 million.

A highly urbanized province, meanwhile, must generate P200 million yearly, which is way higher than the existing P20 million requirement under the LGC.

The income must be generated locally and must include the income from accruing to the general fund but excluding the Internal Revenue Allotment (IRA) shares, special funds, trust fund and non-recurring income.


Also, the measure granted Congress the authority to pass a joint resolution to declare a city or province as highly urbanized within 30 days after it meets the requirements upon proper determination.

Under the current system, the power to identify a highly urbanized city rests solely with the President.

The municipality creation clause also had an overhaul, with the minimum income requirement raised to P12.5 million for the last two consecutive years based on year 2013 constant prices alongside the other mandatory provision of having 25,000 inhabitants.

The creation of the municipality will not reduce the land area, population or income of the original municipality or municipalities at the time of the creation to less than the minimum requirements prescribed.

Under the 1991 Local Government Code, the required income for the formation of a municipality is set at a paltry P2.5 million.

The distinction of being a highly urbanized is highly sought by local government units because it determines their respective IRA allocations from the government.

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