Provinces to DOF: We’re not living off national gov’t dole outs
Provinces to DOF: We’re not living off national gov’t dole outs
The League of Provinces of the Philippines responds to the DOF tax watch ad, saying that Internal Revenue Allotments are constitutionally due them

MANILA, Philippines – Provinces are not living off national government “dole outs,” the League of Provinces of the Philippines (LPP) said in a statement, Monday, June 23.

LPP responded to the Department of Finance (DOF) and Bureau of Local Government Finance (BLGF) tax watch ad released June 18 that said bulk of the regular income of 7 out of 10 provinces in the country still comes from the national government.

Their Internal Revenue Allotments (IRA) are constitutionally due them, LPP said.

Citing article X, Section 6 of the 1987 Constitution, LPP President and Oriental Mindoro Gov. Alfonso Umali Jr. said: “This simply means that the IRA are entitlements to each local government to allow them to effectively and efficiently deliver basic and vital services to their respective constituents which were devolved by the national government to the LGUs when the Local Government Code was enacted.”

Instead of making the provinces and other LGUs the target of its shame campaign, the DOF should instead focus its attention on how to carry out its mandate under Section 6 of the Constitution that says LGUs should have a just share in national taxes, Umali added.

LPP has constantly been advocating that the Bureau of Internal Revenue (BIR) stick to basic income in computing the 40% IRA share of LGUs, and not impose a number of deductions, prior to the computation.

It has also been strongly advocating for the inclusion of Customs duties and other national taxes in the computation of the IRA so LGUs could have a just share in national revenues.

LGUs each have ‘limited taxing powers’

While it is true that Section 129 of the Local Government Code (Republic Act 7160) grants LGUs powers to levy taxes, fees, and charges, it likewise clearly sets the limits to the taxing powers of each LGU level, namely, the provinces, cities, municipalities, and barangays, Umali said.

DOF and BLGF must understand that compared to cities and municipalities, the Local Government Code has granted very limited tax base to the provinces. “In fact, for some provincial LGUs, the taxes are not productive enough to allow them to raise revenues,” Umali pointed out.

For instance, RA 7160 limits the tax base of the provinces to real property tax (RPT); tax on transfer of real property ownership; tax on business of printing and publication; franchise tax; sand and gravel tax; amusement tax; professional tax; and annual fixed tax on delivery trucks and vans of manufacturers/dealers.

In the case of RPTs, whatever is collected is still shared among the province, which gets 35%; municipality, which gets 40%; and the remaining 25% goes to the barangay, Umali cited.

“Likewise, the province loses its share in the RPT when a municipality is converted into a component city,” Umali added. –

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