Bill providing LGUs higher shares from national taxes pushed

MANILA, Philippines - Sen. Aquilino Pimentel III is pushing for the passage of his pet measure that will enable local governments to receive a P500-billion windfall in their shares from national taxes once it is passed next year.

Under his proposed new scheme called Shares in National Taxes (SNT), Pimentel, chairman of the oversight committee on the Local Government Code of 1991, wants to expand the tax base to include collections by the Bureau of Customs (BOC).

The SNT seeks to replace the Internal Revenue Allotment or IRA, the local government unit (LGU)’s share of revenues from the national government.

Pimentel dubbed the measure as the “Bigger Pie, Bigger Slice” bill, which he presented recently to local officials attending the 32nd founding anniversary of PDP-Laban at Makati Palace Hotel in Makati City.

Under Senate Bill 2045, Pimentel proposed that LGU shares from national taxes will increase to 50 percent. At present, LGUs get 40 percent of the national internal revenue taxes while the national government gets 60 percent.

“Our proposed bill seeks to equalize the division of the collected national taxes, 50-50, or equal sharing,” he said.

“Can this be done? The answer is yes. We anchor our legislative efforts on this proposed bill on the express provisions of the 1987 Constitution itself,” Pimentel said, citing those that provide for a just share for LGUs from national taxes.

The phrase “national internal revenue taxes” would be replaced by the more appropriate term “national taxes” once the bill becomes law, according to Pimentel.

“The phrase ‘national taxes’ would now include taxes collected by the BOC that are called by different names under existing laws like tariffs and duties,” Pimentel said.

Aside from duties collected by the BOC on imported goods, the SNT would cover value-added tax (VAT) and excise taxes, as well as national internal revenue taxes collected by the Bureau of Internal revenue (BIR).

The bill expands the “national taxes” to cover collections, fees and other inflows of the Philippine Ports Authority, Department of Environment and Natural Resources and Department of Foreign Affairs, among others.

“Essentially, we are increasing the size of the pie to be divided among the LGUs,” Pimentel said. “The LGUs’ increased share from the increased tax base is envisioned to effect more changes in the lives of more constituents. It means more available funds for more benefits and better services made available to more people.”

Under the bill, the IRA for 2014 of over P341 billion would be increased to over P500 billion in 2015 as SNT, a figure that Pimentel said represents a “conservative estimate.”

The windfall is possible because BIR collections would be divided equally between the national government and LGUs, on top of another half of roughly P289.866 billion representing BOC collections, Pimentel said.