GOVERNING THE COMPUTATION OF NATIONAL INTERNAL REVENUE ALLOTMENTS TO LOCAL GOVERNMENT UNITS

• Number: Presidential Decree No. 1741
• Sections: 8

Preamble

WHEREAS, internal revenue allotments are apportioned among

local government units on the basis of the Tax Code, P.D. No. 144 (as amended)

and various other laws;

WHEREAS, it is necessary to rationalize the system of

national revenue allotments to local government units, in the light of the

termination of P.D. No. 1231 on December 31, 1980 and the various forms in which

national assistance is presently extended to local government units;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the

Philippines, by virtue of the powers vested in me by the Constitution, do hereby

Order and Decree:

Section 1 Statement of Policy.

SECTION 1. Statement of Policy.—It shall be the

policy of the State to strengthen the fiscal operations of local government

units, consistent with the principle of decentralization in government

operations. Part of the collections of the national government obtained from

internal revenue sources shall accrue to local government units, comprising

national assistance to the said local government units. The amount of assistance

shall be determined, taking into account local requirements and available

national funds, particularly as determined by the cost of implementing the

national development plan.

Section 2 Magnitude of Assistance.

SEC. 2. Magnitude of Assistance.—A maximum of

twenty per cent (20%) of national internal revenue taxes shall be available for

national assistance to local government units: Provided, That the

national revenue used as basis in computation shall exclude receipts accruing to

Special or Fiduciary Funds and to Special Accounts in the General Fund, amounts

authorized by law to be used by the collecting agency, and amounts recorded as

income of the General Fund but which are charged to appropriations in the

General or other Appropriations Laws.

The amount of assistance shall be computed on the basis of collections

received by the national government during the third fiscal year preceeding the

fiscal year during which the assistance is distributed. Compliance shall be

reckoned taking into account general budgetary assistance and assistance

specifically intended for local schools, reforestation projects, or other

priority local activities supported by the national government.

Section 3 Allocation.

SEC. 3. Allocation.—The total amount available

shall be allocated among local government units as follows: provinces—thirty per

cent (30%); municipalities—forty-five per cent (45%); and cities—twenty-five per

cent (25%).

The share of each local government unit shall be determined on the basis of

population—seventy per centum (70%); land area—twenty per centum (20%); and

equal sharing—ten per centum (10%).

Section 4 Rate of Change.

SEC. 4. Rate of Change. —The annual allotment of

any local government unit shall not increase by more than twenty-five per cent

(25%) of, nor shall be less than, its actual allocation for the preceding year,

except when otherwise approved by the President (Prime Minister) upon

recommendation of the Minister of the Budget and the Minister of Local

Government and Community Development.

Section 5 Development Fund.

SEC. 5. Development Fund. —No less than twenty per

cent (20%) of the allotments received by a local government unit under this Act

shall be appropriated and used by the recipient local government unit for

development projects, except as may be otherwise approved by the Minister of the

Budget. The nature and cost of the programs, projects and activities supported

by the Development Fund shall be determined by the local government unit

following such policies and guidelines jointly issued by the Minister of Local

Government and Community Development and the Minister of the Budget.

Section 6 Rules and Regulations.

SEC. 6. Rules and Regulations.— The Minister of the

Budget shall issue the necessary rules and regulations for the prompt and

effective implementation of this Decree.

Section 7 Repealing Clause.

SEC. 7. Repealing Clause. —All laws or parts of law

inconsistent herewith, particularly P.D. No. 144 and 1231, are hereby revoked or

modified accordingly.

Done in the City of Manila, this 31st day of October, in the year of Our Lord

nineteen hundred and eighty.

(Sgd.) FERDINAND E. MARCOS

President

Republic of the Philippines

By the President:

(Sgd.) JUAN C. TUVERA

Presidential Executive

Assistant