IRA Base Basis Bawas na? (Part 2)

"Special funds, special accounts and the COA share should not be deducted prior to the computation of the mandated LGUs’ 40% IRA share."

During the recent 18th meeting of the Coordinating Committee on Decentralization (CCD) chaired by DILG Usec. Austere Panadero, and with NEDA, DOF, DBM, and other government officials in attendance, among several equally urgent items in the agenda, the League of Provinces of the Philippines (LPP) presented this long-standing issue on IRA base. We questioned the validity of DBCC Resolution 2003-02 which is based on an old inoperative law, i.e. PDs 144 and 1741 that is still presently being used by the Bureau of Internal Revenue (BIR) in deducting several special accounts and the COA share from the national internal revenue base prior to the determination of the 40% IRA share of LGUs.

We presented our case and convinced the CCD members to take immediate action to strongly recommend the strict implementation of the provisions of existing laws, particularly RAs 7160 and 8424, i.e. the 1991 Local Government Code and the National Internal Revenue Tax Code of 1987, respectively, that have superseded PDs 144 and 1741, particularly on the system of internal revenue allotments (IRA) to LGUs. In the absence of any authority from Congress to authorize BIR to deduct several special accounts and the COA share to lessen the tax base for the IRA, said DBCC Resolution 2003-02 is ultra vires.

From 1992 to 2017, total deductions comprising Special Accounts and the COA Share amounted to a total of P585 Billion and 40% of this amount is P234Billion representing the uncollected mandated IRA share of LGUs.

In 1992, there were only 7 special accounts. The average IRA shortfall then, as a result of these deductions during the Ramos administration was P994M/year that lowered the LGUs’ 40% IRA share by 1.3%. But these special accounts have been increasing through the years as a result of this DBCC Resolution 2003-02. The average IRA shortfall went up to P1.6B/year during the Estrada administration, then quadrupled to P4.7B/year during the Arroyo administration, and spiraled to an average of P23.803B/year during the administration of former President Aquino III. For 2017, it went up to P39.764B, or 6.10% lower than the mandated 40% IRA share of LGUs because there are now about 29 special accounts with even bigger amounts being deducted that continue to lower the mandated IRA share of LGUs.

Since the 2018 GAA has already been approved, the IRA level of P522.7B still does not include these special accounts and COA share, the CCD will favorably recommend to the Office of the President to instruct the DBCC to amend its 2003-02 Resolution to conform to existing laws and implement the rightful determination of the IRA base effective FY 2019.

(To be continued…)

 

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About the Author
Sandra Tablan Paredes is presently the Executive Director of the League of Provinces of the Philippines (LPP) since October, 2016 although she previously served LPP as Director from 1997 to 2004 Sandy helped organize ULAP in 1998 with former Governor Joey Lina and advocated for the LGUs' rightful IRA share, among other league advocacies, programs and projects to help local officials ensure local and fiscal autonomy and good governance. Recently served as concurrent interim Executive Director of ULAP from Jan-March 31, 2017. You can email her at This email address is being protected from spambots. You need JavaScript enabled to view it.
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