Logic, fairness dictate adjustments in IRA sharing

Section 285 of the Local Government Code (LGC or Republic Act 7160) provides for the following percentage shares of local government units (LGUs) with respect to the internal revenue allotment (IRA): provinces—23 percent; cities—23 percent; municipalities—34 percent; and barangays—20 percent.

Since the passage of the LGC, the number of provinces and cities has risen. In contrast, the number of municipalities has gone down. Consider the following data from the Department of Budget and Management (DBM):

Under Local Budget Memorandum No. 24 dated June 15, 1995, there were 77 provinces, 65 cities, and 1,540 municipalities.

Under Local Budget Memorandum No. 66 dated July 2, 2012, the number of provinces went up to 80, and that of the cities soared to 140, while that of the municipalities dropped to 1,484.

In other words, between 1995 and 2012, the number of provinces grew by 4 percent, that of the cities by a whopping 115 percent, while that of the municipalities contracted by 4 percent.

The changes in the number of provinces, cities and municipalities over time necessarily create implications on the IRA sharing proportions. Simple logic would dictate that upward adjustments have to be made with respect to the shares of the provinces and cities, both of which have risen in number. In contrast, the share of the municipalities would have to be adjusted downwards, as they have become lesser in number after the conversion of many municipalities into cities. Of late, there were 16 municipalities that became cities. And many more are presumably seeking their conversion into cities for obvious reasons.

I am not privy to the formula used in allocating the IRA by LGU grouping. But I suppose one logical scheme is to raise the IRA shares of the provinces and cities by a percentage proportionate to the increase in their number from year to year, and to lower the share of the municipalities in proportion to the decrease in their number over time.

It may be recalled that the League of Cities protested in vain to the latest conversion of the 16 municipalities into cities, presumably for the reason that the IRA shares of existing cities would be affected adversely. But if the corresponding adjustments in the IRA shares, by LGU group, had been made, there would have been no need to protest. This act, however, would require the amendment of Section 285 of the Local Government Code. Such is an issue that Congress, in collaboration with the DBM, needs to attend to immediately if only to rationalize the IRA sharing ratios, by LGU group.

—RAUL A. MABINI,

former vice president for Visayas,

Philippine Association for

Government Budget Administration,

[email protected]