Solon wants VAT collection of BOC included in IRA share of LGUs

Tuesday, 28 June 2011 01:50

A House leader has proposed the inclusion of the value added tax (VAT) being collected by the Bureau of Customs in the computation of the Internal Revenue Allotment (IRA) share of local government units to help LGUs pursue vital programs and finance their devolved responsibilities. Rep. Salvio Fortuno (5th District, Camarines Sur), Chairman of the House Committee on Bicol Recovery and Economic Development, said almost two decades after the passage of Republic Act 7160 otherwise known as the Local Government Code of 1991, many LGUs have been persistently clamoring for the reversion of their devolved functions and responsibilities, specifically health services, to the national government.

"It is very apparent that the shares of local governments in the IRA, particularly those LGUs which belong to lower income classifications, have not been sufficient in most cases to finance devolved responsibilities. The root cause therefore of their grievance is money, and there must be a legal way to find a source," said Fortuno, author of House Bill 4800.

Fortuno said RA 7160 provides LGUs with a share in the national internal revenue taxes, which under RA 8424 otherwise known as the Tax Reform Act of 1997, includes income tax, estate and donor's tax, VAT, other percentage taxes, excise taxes, documentary taxes and such other taxes as are hereafter maybe imposed and collected by the Bureau of Internal Revenue (BIR).

Fortuno said the VAT taxes being collected by the BOC have not been included in the IRA computation despite the provision of the Tax Reform Act.

"This effectively deprived the LGUs of their just share in the national internal revenue taxes amounting to billions of pesos," said Fortuno.

Under the bill, the Department of Finance, in coordination with the Department of Budget and Management, Department of Interior and Local Government and the leagues of local government units shall issue the necessary rules and regulations within 60 days after the effectivity of the measure once it becomes a law.

Source: http://www.congress.gov.ph

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