First Aquino-generated IRA highest for LGUs in 3 years

MANILA, Philippines – Local government units (LGUs) are set to receive an internal revenue allotment (IRA) in 2013 that’s highest in the last 3 years, and the first to be generated under the current administration.

The Department of Budget and Management (DBM) announced on Wednesday, January 9, that the total P302.3 billion that will be released to LGUs is a result of higher tax collections since Benigno “Noynoy” Aquino III became president.

The IRA for a current year is computed based on the national government’s gross internal revenue collection 3 fiscal years earlier, as prescribed in Section 284 of the Local Government Code. The 2013 IRA is based on the P822.6 billion collected by the Bureau of Internal Revenue in 2010.

The IRA received by local governments in the first years of the Aquino administration, 2010-2012, were based on BIR’s collections under the administration of President Gloria Arroyo. During those years, the LGUs received P265.8 billion, P286.94 billion, and P273.3 billion (as opposed to the P219.9 billion cited in a DBM press release).

DBM Secretary Florencio Abad said gross tax revenues collected in 2010 climbed to P822.6 billion from P750.3 billion in 2009, when the economy was still reeling from the impact of the 2007-2008 global financial crisis.

“With bigger IRA shares now available to them, our local governments will have more legroom to boost their operational efficiencies and improve the delivery of key goods and services to the public,” Abad said in a press release.

New provinces, cities

Under the Local Government Code, 40% of BIR’s annual collection goes to LGUs. The amount is divided thus: 23% for the provinces, 23% for cities, 34% for municipalities, and 20% for barangays.

Within each level of local government, the shares are distributed this way: 50% according to population; 25%, land area; 25%, equal sharing. Allocations for barangays, on the other hand, are determined through population (60%) and equal sharing (40%).

Under the administration of former President Gloria Arroyo, the release of the IRA became automatic and direct to the LGUs, on a quarterly basis, to avoid delays and the propensity of higher local chief executives for using it as political tools against lower-level local officials.

In most municipalities, the IRA accounts for 90% of their income. LGUs are mandated under the Code to allocate 20% of their IRA to development projects.

The 2013 IRA should be divided among 80 provinces, 143 cities, 1,491 municipalities, and 42,028 barangays — the latest official count of the National Statistics Coordination Board, although the DBM press release cited different numbers of provinces, towns, and barangays.

The province of Dinagat Islands will be getting its IRA share for the first time after the Supreme Court upheld in September the constitutionality of its creation. In 2012, it was getting its IRA as a municipality of Surigao del Norte.

Five municipalities were converted into cities in 2012, and will thus see their IRA shares tripled this year: Bacoor and Imus in Cavite, Ilagan in Isabela, Mabalacat in Pampanga, and Cabuyao in Laguna.

The higher allotment for LGUs is in line with the position stated by Aquino during the presidential campaign. He said LGUs could get higher amounts of IRA through efficient tax collection on the part of the national government, and there wasn’t necessarily a need to increase their percentage share in the BIR collection. – Rappler.com