Pimentel bats for more LGU shares in national taxes;
seeks to scrap IRA and change it to SNT

DAVAO CITY -- Senator Aquilino "Koko" Pimentel III today said it is about time after 23 years of the Local Government Code to scrap the internal revenue allocation (IRA) and replace it with share in the national taxes (SNT) so that local government units (LGUs) will receive their rightful shares.

Speaking before the "Mindanao Empowerment Summit" at the Grand Men Seng Hotel, Davao City, Pimentel said the change in the formula in increasing the tax base and increasing the shares in the national taxes of LGUs is contained in his proposed pet measure, dubbed the "Bigger Pie, Bigger Slice" bill.

"The LGUs increased share from the increased tax base is envisioned to result in more positive quality of life changes in the lives of more Filipinos. It means more available funds for more benefits and better services made available to more people," he said.

Under the "Bigger Pie" concept, the bill seeks to replace the words "national internal revenue taxes" with the more appropriate term "national taxes" to include taxes collected by the Bureau of Customs (BOC) in addition to those collected by the Bureau of Internal Revenue (BIR).

The "Bigger Slice" portion of the bill seeks to equalize the division of the collected national taxes from the current 40 percent to 60 percent sharing between LGUs and the national government to a 50-50 sharing, or simply put he described it as "hating kapatid."

Pimentel said under his proposal, the P341 billion LGU shares for 2014 will increase to over P600 billion next year as SNT based on the budget of expenditures and sources of financing (BESF) books with 2012 as base year, including mandatory deductions pegged at approximately P70 billion.

He said the tremendous increase is made possible by increased BIR collections from which LGUs will be allotted a 50 percent share and the inclusion in the computation of roughly P290 billion of BOC collections from which LGUs will also get a 50 percent share.

Using conservative estimates, he said the SNT for barangays in 2015 would translate to P120 billion, up from P68.309 billion in 2014; P204 billion for municipalities, up from P116.125 billion; P138 billion for cities, up from P78.555 billion; and P138 billion for provinces, up from P78.555 billion.

"All these substantial increases in funding are meant to benefit the LGUs and their constituencies," said Pimentel, who sought support for the early passage of his bill as his humble contribution in the empowerment of LGUs.

He said the funds would translate to more resiliency-constructed schools, manned by better-trained teachers, better health care through well-stocked and professionally run local hospitals and health centers, and more sustainable and relevant livelihood projects and job opportunities.

This, he said, would in turn provide the people with the food, shelter, and other material resources that they need in order for them to pursue their dreams, ambitions, and aspirations in life.

"We are empowering local governments because we love the Filipino people. When we empower local governments, we help the people help themselves."

Pimentel said the Local Government Code, a legacy of his father, former Senator Aquilino "Nene" Pimentel Jr., was a product of compromise, the give-and-take in the law-making process that without it "we would not have the progress that we are seeing all around us."

He said the significance of the Local Government Code could not be understated. "It has greatly impacted on the whole local government spectrum. It has capacitated the LGUs to pursue their development objectives with the grant of greater financial muscle."

He cited a study which showed that the IRA has accounted for at least 56 percent of the total LGU revenues, and that in lower income municipalities, the IRA has contributed from a low of 65 percent to a high of 90 percent of the total LGU revenues.

Although the IRA is significant to LGUs, he said he is proposing to scrap it in favor of the SNT which he ascribed as more constitutional, "meaning more compliant with the Constitution, because national taxes is the phrase itself used in the Constitution."

Cabinet officials, provincial governors, city and municipal mayors and multi-sectoral leaders attended the two-day summit with a theme "Empowering the Local Government Units through Fiscal Autonomy."