Aquino skirts calls for bigger LGU share in taxes

President Benigno Aquino III was non-committal on Wednesday to rushing a law that would give local government units (LGUs) bigger shares of national taxes.

Amid calls to pass the so-called “Bigger Pie, Bigger Slice Bill” in Congress, Aquino on Wednesday said that even without increasing the LGU percentage share, the funds allotted to them have already increased.

Aquino said because of the improvements in tax collection, the LGUs were able to receive internal revenue allotment (IRA) of P389.86 billion in 2015, from only P265.8 billion in 2010. He said the amount does not even include the Performance Challenge Fund and the Bottom Up Budgeting.

The Performance Challenge Fund is an incentive for LGUs that comply with certain criteria.

“Dahil gumanda na ang ating ekonomiya, gumanda pa lalo ang ating tax collection (Because of our improving economy, tax collection has also improved),” he said during the general assembly of the League of Municipalities of the Philippines (LMP) held at the Manila Hotel.

Bigger pie, slice

In its declaration, the group of mayors called on Aquino to certify as urgent the “Bigger Pie, Bigger Slice” bill of Senator Aquino “Koko” Pimentel III.

A similar bill has been filed by Representative Mel Senen Sarmiento in the House of Representatives.

Both measures propose changing the formula in determining the shares of LGUs in national taxes to 50 percent from 40 percent as provided in Republic Act No. 7160.

The proposed bills also want to expand the tax base to include collections of the Bureau of Customs and the Bureau of Internal Revenue by amending the law to change the term “national internal revenue taxes” to “national taxes.”

LMP said the increase in allocation would “bolster the delivery of basic services and improvement of key programs on infrastructure, agriculture, industry, tourism and trade, among others.”

Perform well first

While Aquino was not outright in thumbing down the proposal, he told the mayors that among the problems that he was facing was the pension of uniformed personnel. He said that while the allotted funds for their pension was P50 billion two years ago, next year it might go up to P80 billion.

He said the government needed almost P2 trillion, or almost as much as the annual national budget of P2.6 trillion, just to set up a pension system for uniformed personnel, instead of sourcing it from the budget.

“Siguro kaya kong i-commit sa inyo, sa mga nagpapakitang-gilas, hindi mahirap dagdagan ang inyong pondo,” (Maybe what I can commit is that if you perform well, it won’t be difficult to increase your funds) he said.

He said incentives were being given to LGUs that perform well. Among these are the Seal of Good Housekeeping, which started in 2011, and the Seal of Good Local Governance, which started in 2014.