The Department of Budget and Management on Friday said the internal revenue allotment share of local government units would decrease to P273 billion in 2012 compared to P287 billion this year.
In a statement, Budget Secretary Florencio Abad attributed the lower IRA share of LGUs to the sharp decrease in revenues in 2009 as a result of the global economic crisis and “revenue-eroding measures passed at that time.”
“Year after year, we in the Department of Budget and Management have followed the provisions of the Local Government Code on the share of LGUs in national internal revenue taxes, with no exception,” Abad said.
“It is unfortunate that revenues in 2009 declined, but that is the legally-mandated base year for computing the IRA for fiscal year 2012,” he added.
According to the Local Government Code, the IRA share of LGUs should be computed as 40 percent of the national internal revenue taxes collected in the third fiscal year before the current fiscal year.
Based on this formula, the DBM said the IRA share of LGUs would decrease by P13.635 billion or 4.8 percent to P273.31 billion in 2012 from P286.94 billion in 2011.
Abad also said the IRA’s sources only include taxes collected by the Bureau of Internal Revenue and do not include tariffs and customs duties.
He said the National Internal Revenue Code of the Philippines has identified the national internal revenue taxes that are sources of IRA. These are income tax; estate and donors’ tax; value-added tax; other percentage taxes; excise taxes; documentary stamp taxes; and such other taxes that may be imposed and collected by the BIR. Norman Bordadora