The country’s provinces and smaller local government units (LGUs) will benefit from heightened development prospects through a legislatively-mandated increase in their allocated shares in national taxes, in a bill being pushed by Senate President Koko Pimentel III that should act “as a preparatory step to a meaningful shift to a federal system of government.”
Pimentel’s Senate Bill 110, which he calls the “Bigger Pie, Bigger Slice” bill, seeks to increase LGUs’ share in national taxes to 50% from the current 40%. It amends Section 284 of the Local Government Code.
Increase LGUs’ share in national taxes to 50% from the current 40%.
The measure, filed in June 2016 but currently gaining renewed traction as talks of a federal shift increased, likewise expands the sources of revenue to include all other sources classified as “national taxes,” not just “national internal revenue taxes.”
Expand the sources of revenue to include all other sources classified as “national taxes,” not just “national internal revenue taxes.
The bill defines national taxes as those referring to “national internal revenue taxes collected by the Bureau of Internal Revenue, and the tariffs, duties, fees and charges as well as the national internal revenue taxes, if any, collected by the Bureau of Customs. National taxes shall likewise include value-added taxes collected by both agencies.”
SB 110 additionally mandates that LGUs shall appropriate no less than 20% of their received shares for development projects.
“We’re slowly and steadily laying the foundations for a stable federal system by strengthening our local government units nationwide. Developed LGUs form the economic core, the developmental backbone of strong federal states, in a federal republic,” stressed Pimentel.
The Senate chief added that he deemed it necessary to address concerns raised by critics and oppositors of the planned shift to a federal system of government through anticipatory and preparatory legislation, adding that laws should be “forward-looking.”
“I often hear critics say our LGUs are ill-prepared for federalism. Our solution is therefore to prepare them through the most direct way possible: increasing their allocated share in national taxes so that revenues received may be utilized for specific local development programs.”
“We should not underestimate the capacity of our LGUs. They just need the right economic push through an amendment of the Local Government Code. The law champions local autonomy in the first place, and it is not inconsistent with a proposed federal system,” Pimentel noted.
The Senate President’s own father, former Senator Aquilino “Nene” Pimentel, Jr., is widely acknowledged as the father of the Local Government Code of 1991 or Republic Act 7160. The elder Pimentel has been a long time advocate of federalism.