Pimentel seeks bigger LGU share of national taxes

Senator Aquilino “Koko” Pimentel III. INQUIRER FILE PHOTO

MANILA, Philippines—Senator Aquilino Pimentel III is trying to have the Local Government Code, authored by his father, amended to increase the local governments’ share of national tax revenues.

Pimentel has filed Senate Bill No. 2045 allowing the LGUs to have a share of customs collections on top of the proceeds of value-added tax, among other internal revenue taxes.

He proposed to expand the source of funds for LGUs under the 1991 Code from national internal revenue taxes, including VAT, to include all collections of the Bureau of Customs as well.

He sought to do this by tweaking the term “national internal revenue taxes” to “national taxes,”  so that apart from VAT and other internal revenue taxes, the provinces, cities, municipalities and barangays would also enjoy a share of all the collections of the Bureau of Customs. Thus his bill is called the “Bigger Pie, Bigger Slice” bill.

He defined national taxes as those collected by the Bureau of Internal Revenue; tariffs, duties and fees; and those collected by the Bureau of Customs.

The net effect of the bill is that the LGUs’ share of the “bigger pie” would soar to 50 percent from the current 40 percent, Pimentel said.

If the bill is enacted into law, the LGUs would have more resources at their disposal to perform their role as “frontliners’’ in government service, Pimentel said.

“As frontliners in the delivery of government services, LGUs have been given numerous mandates, but most of the time, the resources to fulfill these mandates have been overlooked, and have not been coming,” he said.

The measure follows the letter and spirit of the 1987 Constitution, which provides that LGUs shall have a just share in the national taxes, “which shall be automatically released to them,” he said.

His father, former Senator Aquilino Pimentel Jr., authored the 22-year-old code.

Apart from the LGUs, Pimentel stressed that the national government’s campaign against smuggling would gain a big boost from the passage of his bill.

In effect, the bill would convert the anti-smuggling campaign into a “national and grassroots concern,” he said.

“The LGUs will now be more sensitive on matters concerning smuggling for the simple reason that if the fight against smuggling succeeds, the BoC’s collections will increase, and which will in turn increase the LGUs share in the national taxes,’’ he said.

In the bill, the senator said that the LGUs’ share of the national taxes would follow the formula in the Local Government Code.

He stressed that no less than 20 percent of the LGUs share of the national taxes should be allotted to development projects.