Binay seeks more autonomy for local government units

MANILA, Philippines – Makati City Mayor Jejomar Binay called anew yesterday for the amendment of the Local Government Code to grant more autonomy to local government units (LGUs).

Speaking to officials from Makati’s 49 sister cities and municipalities at a conference held at the University of Makati, Binay said the provisions of the Local Government Code should be changed regarding the criteria for determining the share of cities and municipalities in the Internal Revenue Allotment (IRA) or the share of local governments from national
taxes.

The IRA is currently computed based on land area and population, which has resulted in cases wherein bigger and more prosperous LGUs receive a bigger share of the IRA while small and poor towns get less.

“Right now, the bigger the LGU’s land area and population, the bigger its IRA (share). That sounds perfectly equitable. Trouble is, usually, the smaller the LGU, the smaller its local income, so it needs more allotments from the national government,” Binay said.

Binay said the current procedure by which the IRA goes through the Department of Budget and Management should be amended.

“The IRA should be released directly to the local governments, and one approach is to allow local governments to deduct their share of national taxes they collect before remitting it to the national government. The law provides that the transfer of allotments should be automatic, but it has loopholes that a sitting president can use to abuse the procedure and impose her political will,” Binay said.

Binay said that the most common measure of local autonomy is how much of total government expenditure is being spent by local governments, and how much by the national government. He said that the worldwide consensus is a ratio of 40 to 60.

“In other words, true and meaningful autonomy is indicated if local governments as a whole are spending 40 percent of total government expenditures,” he said.

Binay said that based on records from the Bureau of Local Government Finance, from 2001 to 2004, the ratios of LGU expenditures to national government expenditures are way below the accepted ratio.