Monday, September 24, 2007 Revenue plowback to local gov’ts to increase
BARANGAY officials elected next month will be spending bigger Internal Revenue Allotments (IRA) as it will jump to P26.8 billion or from P183.9 billion this year to P210.7 billion next year.
IRA represents local government share from national taxes collected.
While barangays will receive only a fraction of the IRA, the additional amounts would still allow these basic political units to undertake programs for their constituents, Budget Secretary Rolando Andaya Jr. said.
He cited the example of Metro Manila barangays which will collectively receive P3.65 billion in IRA next year from this year‘s P3.14 billion level.
“In Cebu, the combined IRA of barangays there will increase from P1.3 billion this year to P1.5 billion next year. In Batangas, from P899 million this year, the IRA of barangays there will breach the P1 billion mark next year,” he said.
“On the average the barangay IRA will increase by 14.6 percent,” Andaya said.
Meant to financially empower the local government units (LGUs), the IRA is their “dividend” from national taxes collected three years before, so in the case of the 2008 allocations, on the 2005 Bureau of Internal Revenue (BIR) collections.
As set by the Local Government Code, the total IRA pie is divided as follows: 23 percent to provinces; 23 percent to cities; 34 percent to towns; and 20 percent to barangays.
The share of an LGU is determined in turn by its population and land area, and the principle of “equal sharing.”
Following the above formula, barangays will be getting as much as P42 billion in IRA next year.
Andaya said IRA will be one of the big ticket items in the next year’s proposed P1.227 trillion national budget.
“As revenue collections increase, so does the share of LGUs. If a rising tide raises all ships, buoyant revenues have the same effect on the budgets of our communities,” said the budget chief.
“This is borne by the fact that in 2006, IRA was P166.46 billion. By 2008, we would have increased it by one-fourth, or by P44.2 billion,” he said.
As of February this year, there were 82 provinces, 118 cities, 1,507 towns and 41,885 barangays in the country.
Because the IRA is “deemed automatically appropriated,” Andaya said it will be released to LGUs “in full and on time” regardless of any delay in the passage of the General Appropriations Act.
The IRA is, however, just one of the components of “revenue plowbacks” to LGUs, which the national budget lumps together under the “Allocations to Local Government Units” or ALGU.
For next year, the government is eyeing the release of close to P8 billion in other LGU entitlements which include share of LGUs from tobacco excise tax and VAT collections; franchise taxes and even fees paid by mining companies and similar firms that utilize “national wealth.”
Andaya said next year’s IRA will be bigger as the base year used in computing it, 2006, was the period that new and higher taxes passed were first implemented. “For LGUs, the best is yet to come,” he said. (Press release)
