IRA relevance

LOCAL government units (LGUs) play a very significant role in national development. The growth of local communities, taken together, translates into national growth. Hence, in order to ensure that LGUs progress and keep themselves aligned with national governance thrusts, equitable and adequate endowment from the central government, otherwise known as Internal Revenue Allotment (IRA), is a prerequisite.

The Internal Revenue Allotment is clearly provided for in Article 10, Section 7 of the 1987 Philippine Constitution which states: “Local governments shall be entitled to an equitable share in the proceeds of the utilization and development of the national wealth within their respective areas, in the manner provided by law, including sharing the same with the inhabitants by way of direct benefits.” Similarly, Sections 284 and 285 of RA 7160, the Local Government Code of 1991, provides the manner by which the IRA will be allocated to local government units using the formula provided therein.

The equitable share of local government units in national receipts not only capacitates them to pursue development initiatives but, more so, enhances and deepens the meaning of local autonomy. Increasing the IRA of local government units consequently multiplies their potential for growth and development as greater financial resources will be available for the LGUs to address local needs. For local government units which remain dependent on their Internal Revenue Allotment (IRA) to implement national and local programs on health and agriculture, among others, an increase in their IRA will mean not only increased responsiveness to the people’s needs but as well as an opportunity to strengthen local financial capacity, and in the long run, financial independence and autonomy.

With the shift to a federal form of government, a corresponding increase in the IRA of local government units may be anticipated, as greater administrative autonomy will require greater financial capacity. While we wait for our fourth charter change to unfold, and for federalism to be the key that will unlock national inclusive growth, local community building remains as our shared goal.