The IRA dependency of LGUs remains to be one of the main issues LGU-Leagues are facing, more so now that Congress is considering amending the 1991 Local Government Code (again).
The IRA dependency of LGUs remains to be one of the main issues LGU-Leagues are facing, more so now that Congress is considering amending the 1991 Local Government Code (again).
In the Philippines, local government units or LGUs, particularly Provinces and Municipalities are being cited as largely dependent on the Internal Revenue Allotment or IRA compared to Cities which have more taxing powers and more opportunities to raise local funds. In 2015, Provinces and Municipalities, on the average, were 79% IRA-dependent while cities were at 40%.
The situs of tax greatly favors Metro cities where the main offices of banks and business establishments are located. In 2015, only 5 local Cities generated P4B and above. Quezon City and Makati, generated P17.3B and P11.8B, respectively, from its local tax and non-tax revenues compared to the P280M/year average collection of provinces. This unfair fiscal policy enjoyed by a handful of Metro cities greatly contributed to the ever-growing income disparity amongst LGUs. No wonder majority of LGUs remain IRA dependent.
But to say that LGUs are “IRA-dependent” with a negative connotation isn’t fair! IRA is a constitutional right of LGUs. It’s part of the national budget. NGAs’ funds come from the General Appropriations Act (GAA). Hence, NGAs are also “GAA-dependent”! NGAs’ budgets continue to increase despite devolution of its functions to LGUs! IRA accounts for only 16% of the national budget while 86% is still controlled by Central authorities.
Our present unitary form of government has perpetuated this reliance of LGUs from the National Government. 25 years after the Code, it is high time that LGUs should have genuine local and fiscal autonomy, with more taxing powers and accorded equal opportunities to meet the growing demands of their constituents.
Hopefully, federalism will indeed help bring about the real change we need!
