Reduce IRAs of “non-performing” LGUs?
Posted by butalidnl on 9 February 2010
On 8 February, Noynoy Aquino proposed that the Internal Revenue Allotments of Local Government Units (LGUs) which do not do their work well should be trimmed down. It’s a nice thought, coming from the idea of reducing waste in government expenditure. The problem with it, however, is that to do so would mean an increase in the president’s prerogatives, of which he has already too many. And if the president will be the one to decide which LGUs to cut the IRAs of, he could very well reduce the IRAs of provinces, cities or municipalities ruled by the opposition.
The Local Government Code, which among other things, provides for the Internal Revenue Allotments of LGUs, also provides for the automatic release of these funds. And with reason. This is to prevent national government tinkering with these funds in order to control the LGUs. I think it is a good idea for the release of these funds to be automatic.
Perhaps it would be a good idea to set up rules (or even pass a law amending the Local Government Code) which would spell out what it means to have a “non-performing LGU”, and then to prescribe exactly how much IRA reduction that will be imposed on it, and what the LGU needs to do to get its allotment restored. This way, the reduction of IRA will go about in an automatic way – that is, devoid of “presidential prerogative”.
Looking into the Local Government Code provision on IRAs, it specifies that the allotment per LGU is determined on the basis of 50% population, 25% land area, and 25% equal sharing – this, after the initial division of the total internal revenue taxes by: provinces (23%), cities (23%), municipalities (34%) and baranggays (20%) . Now, I see the 25% “equal sharing” as unfairly benefitting small, less populous LGUs. I suspect that many of the “not well spent” IRAs is connected to this amount given to small LGUs. Why not just eliminate this item altogether? And then make the division into 2/3 population, and 1/3 territory. This would make the allotments go more to the more populous and bigger LGUs who actually need more of the money, and perhaps are finding it hard to finance all their expenses.
And perhaps the IRA amounts should be published by the government on the internet, as a step towards transparency. This way, the IRA amounts will be known to be public. Of course, it would be best if the full accounts of LGUs also be on the internet.