A LEGISLATOR has pushed for the approval of a bill that seeks to include the Value-Added Tax (VAT) being collected by the Bureau of Customs (BOC) in the computation of the share of local government units (LGUs) in the national internal revenue taxes to help LGUs pursue vital programs and finance their devolved responsibilities.
In seeking the approval of House Bill 4800, Nacionalista Party Rep. Salvio Fortuno of Camarines Sur said almost two decades after the passage of Republic Act (RA) 7160, or the Local Government Code of 1991, many LGUs have been persistently clamoring for the reversion of their devolved functions and responsibilities, specifically health services, to the national government.
“It is very apparent that the shares of local governments in the IRA [Internal Revenue Allotment], particularly those LGUs which belong to lower income classifications, have not been sufficient in most cases to finance devolved responsibilities. The root cause therefore of their grievance is money, and there must be a legal way to find a source,” said Fortuno, author of bill.
Fortuno said RA 7160 provides LGUs with a share in the national internal revenue taxes, which under RA 8424 otherwise known as the Tax Reform Act of 1997, includes income tax, estate and donor’s tax, VAT, other percentage taxes, excise taxes, documentary taxes and such other taxes as are hereafter maybe imposed and collected by the Bureau of Internal Revenue.
He said the VAT taxes being collected by the BOC have not been included in the IRA computation despite the provision of the Tax Reform Act.
“This effectively deprived the LGUs of their just share in the national internal revenue taxes amounting to billions of pesos,” said Fortuno.
As embodied in Fortuno’s bill, the Department of Finance, in coordination with the Department of Budget and Management, Department of Interior and Local Government and the leagues of LGUs shall issue the necessary rules and regulations within 60 days after the effectivity of the measure once it becomes a law.
