Cities should have more IRA share

Hon. Peter T. Laviña

Privilege Speech, January 8, 2008

Madam President, colleagues

There are now on-going discussions on the review of the Internal Revenue Allotment or IRA and the share of national and local governments (LGUs) in this fund collected from national taxes.

Through the Union of Local Authorities of the Philippines or ULAP, LGUs are calling for the increase of its share in the IRA. At present, the sharing is 60-40, 60 percent for the national government and 40 for the LGUs.

Persistent problems of lack of funds, particularly as many national government functions were devolved to LGUs, have pushed ULAP to seek this review.

There are no definite figures yet for the change in the sharing scheme as the Department of Finance, faced by perennial budget deficit, is expectedly resisting.

In the proposed P1.227 trillion national budget for this year, IRA share is pegged at about P210.7 billion. Incidentally, the 2008 General Appropriations Act has not yet been enacted by Congress. However, since it is deemed automatically appropriated, our IRA should be released regardless of its passage in time for the start of this new fiscal year.

In the current sharing of 40 percent for LGUs, 23 percent goes to provinces, 23 for cities, 34 to municipalities and 20 for the barangays.

There are now currently 82 provinces, 136 cities, 1,489 towns, and 41,885 barangays in the country.

And the distribution of these shares are based on population and land area of LGUs and the principle of “equal sharing.” As revenue collection increases, so does the share of IRAs for LGUs.

Lost in the current push for this reform, however, is the rapid rise of cities throughout the country.

Notice Madam President and colleagues that since the 1970s, when a number of our young colleagues here were not even born yet, we have seen the galloping rise in our population and the incessant draw of cities of provincial migrants.

Where before, most of our people live in rural areas, now, there are more people living in urban cities.

There were only 61 cities in 1977 when Councilor Diosdado Mahipus started his political career in the Kabataang Barangay. Today, as Councilor Paolo Duterte starts on his own political career, there are now 136 cities or a more than doubled with a whopping 123 percent increase.

Of these 136 cities, 32 are classified as “highly urbanized cities” like Davao City, 100 as “component cities” of various provinces and four as ‘independent component cities.”

In the Davao Region alone, there are now six cities, namely, Davao, Tagum, Panabo, and Island Garden City of Samal in Davao del Norte, Digos in Davao del Sur, and the latest Mati in Davao Oriental. Very soon, Nabunturan in Compostela Valley, Malita in Davao del Sur and Sto. Tomas in Davao del Norte would become cities too.

It is my firm belief, Madam President, that if there is reform in the IRA sharing between the national government and the LGUs, there must also be a corresponding change in the sharing among LGUs.

There is a need to increase the share of cities from the current 23 percent. Obviously, any increase in the cities’ share must be taken from the 34 percent share of municipalities, which have this penchant of converting their towns into cities even if not qualified.

Recall Madam President and colleagues that last December we passed a Resolution supporting the case of the League of Cities of the Philippines opposing the conversion of several towns into cities.

The creation of every new city reduces our share of the IRA as the 23 percent pie of cities is divided by more and more cities.

I believe that it is only fair and just that such a corresponding adjustment to increase the share of cities be made to make cities more financially capable.

Cities carry the burden of servicing the needs of most of our population today and so, therefore, it should have more in resources.

At the proper time, I will pass a Resolution to this effect.

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