Recto proposes ‘simple’ bill instead of Cha-Cha

Without tinkering with the 1987 Constitution, local governments could get a bigger share of tax collections through a simple bill passed by Congress, according to Senate President Pro Tempore Ralph Recto.

In a statement on Saturday, Recto said ordinary legislation could raise the share of provinces, cities, towns and villages from government income.

In 2018, Recto said local governments stand to lose P121.5 billion due to the “longstanding faulty interpretation” on how the Internal Revenue Allotment (IRA) is computed.

Recto said the IRA, the mechanism that plows back national tax collections to local governments, is in need of improvement.

Under the law, local government units (LGU) get a 40-percent share from the Bureau of Internal Revenue (BIR) collection, but this does not include excise and value-added tax collections of the Bureau of Customs (BOC), Recto said.

“This is wrong because VAT and excise taxes are classified as internal revenue, and the BOC is a mere collecting agent of the BIR, so in computing the share of LGUs in determining their IRA, BOC’s VAT and excise tax collections must be factored in,” Recto said.

“’Yung taga-barrio, pag bumili ng gasolina para sa traktora nya, eh di nagbayad sya ng excise tax. Kung ganoon, bakit hindi mo ituturing na internal revenue ‘yun?” Recto said.

With the BOC’s collections excluded, Recto said the allotment for LGUs for 2018 was only P522.7 billion, when it should be P644 billion.

While Recto said an executive order by the President could rectify the IRA, he said a law passed by Congress could raise the LGU’s share to 50 percent.

The senator said this was to usher in a “fair 50-50, hating kapatid sharing arrangement” on taxes.

Recto said if “the 50 percent IRA + BOC VAT and excise collections formula” were applied this year, the IRA would have been at P804.9 billion, or P282.2 billion bigger than the present P522.7 billion.

“Iyang ganyang panukala na marami sa Senado at sa House, pwedeng pabilisin ang pag-apruba. Kaysa nagtatalo-talo tayo sa Charter Change, magkaisa muna tayo sa IRA change. Sa isyung ‘yan, walang debate,” Recto said.