Increase IRA share
of municipalities to spur inclusive economic growth in countryside,
Office of Senator Chiz Escudero
September 8, 2015
PASAY CITY – Sen.
Francis Escudero called for the restructuring of the distribution of
the Internal Revenue Allotment (IRA) to local government units (LGUs)
by increasing the allocation for municipalities in order to promote
inclusive growth and spur economic development in the countryside.
“Inclusive growth is
possible only if countryside development is provided with the much
needed support. To make it happen, municipalities should be given a
bigger share of the IRA,” Escudero said.
Escudero, who used to head
the Senate Committee on Finance, lamented that the present set-up of
IRA allocation has resulted in a lopsided distribution of funds among
LGUs such that a few provinces and cities receive greater share while
the majority, comprising of less developed or poor towns, receive
Republic Act No. 7160, or
the Local Government Code of 1991, provides that the LGUs shall have a
40-percent share from the national government’s internal revenue
The 40 percent share of the
LGUs is distributed as follows: 23 percent for provinces, 23 percent
for cities, 34 percent for municipalities, and 20 percent for the
At present, there are a
total of 81 provinces, 114 cities, 1,490 municipalities and 42,028
“Certainly, the 34 percent
shared by close to 1,500 municipalities is not enough to support
economic activities in the countryside, especially in towns that have
no sufficient sources of revenue and merely dependent on the IRA,”
Escudero pointed out.
Escudero believes that even
if the IRA allocation for cities is cut in half, it would not make
much difference considering that they have more sources of local
revenues like property and local business taxes unlike most
He cited the cities of
Quezon and Makati, which in 2014 received P3.18 billion and P775
million in IRA, respectively.
That same year, the annual
budget of Quezon City was P13.8 billion while Makati City was P10.3
billion. Both spending plans were funded mainly by local revenues.
“Sa totoo lang kahit
kalahatiin mo ‘yung IRA ng mga siyudad hindi nila halos mararamdaman.
Pero kapag binigay mo ang kalahati ng IRA nila sa mga munisipyo,
mabilis itong mararamdaman at kitang-kita kung saka-sakali ang
magagawa ng maliit na halagang iyan para sa mga munisipyo,” Escudero
Moreover, Escudero said the
current formula for computing the IRA share violates the true meaning
or intent of the 1987 Constitution on the right of LGUs to a just
share in national taxes.
“Article XI, Section 6 of
the 1987 Constitution mandates that LGUs shall have a just share, as
determined by law, in the national taxes, which shall be automatically
released to them,” Escudero said.