Understanding Internal Revenue Allotment In 2023

What is Internal Revenue Allotment?

Internal Revenue Allotment (IRA) is the share of the national revenue allocated to local government units (LGUs) in the Philippines. It is based on a formula that considers the population and land area of the LGUs, as well as their revenue collection performance.

How is IRA Calculated?

The IRA is calculated using a formula that includes the following factors: 1. Population – The number of inhabitants of the LGUs. 2. Land area – The total land area of the LGUs. 3. Equal sharing – A fixed amount that is distributed equally to all LGUs. 4. Collection performance – The revenue collection performance of each LGU.

Why is IRA Important?

IRA is important because it provides a significant portion of the budget of LGUs. It enables them to fund their programs and projects, such as infrastructure development, social services, and environmental protection.

The History of Internal Revenue Allotment

When was IRA Established?

The IRA was established in 1991 under Republic Act No. 7160, also known as the Local Government Code of 1991. This law decentralizes the governance of the country by granting more powers and resources to LGUs.

How has IRA Changed Over Time?

Over the years, the IRA has undergone several changes to improve its distribution and allocation to LGUs. In 2012, the Supreme Court ruled that the IRA should be based on the latest census conducted by the Philippine Statistics Authority.

The Distribution of Internal Revenue Allotment

Who Receives Internal Revenue Allotment?

The IRA is distributed to the following LGUs: 1. Provinces 2. Cities 3. Municipalities 4. Barangays

How is Internal Revenue Allotment Distributed?

The IRA is distributed to LGUs on a quarterly basis. The Bureau of Local Government Finance (BLGF) is responsible for computing and releasing the IRA to LGUs.

What is the Formula for IRA Distribution?

The formula for IRA distribution is as follows: IRA = (Population + Land Area) x Equal Sharing + Collection Performance

What is the Equal Sharing Component?

The equal sharing component is a fixed amount that is distributed equally among all LGUs. It is determined by the Department of Budget and Management (DBM) based on the available funds.

The Importance of Internal Revenue Allotment for LGUs

How Does IRA Benefit LGUs?

IRA is a vital source of funding for LGUs. It enables them to provide essential services and implement development projects that benefit their constituents. The allocation of IRA helps promote local autonomy and decentralization of governance in the country.

What are the Uses of IRA?

LGUs can use their IRA for the following purposes: 1. Infrastructure development – construction and maintenance of roads, bridges, public buildings, and other facilities. 2. Social services – health, education, and welfare programs for the poor and marginalized. 3. Environmental protection – conservation and management of natural resources, waste management, and pollution control. 4. Disaster risk reduction and management – preparation and response to natural and man-made disasters.

The Challenges of Internal Revenue Allotment

What are the Challenges in IRA Allocation?

The allocation of IRA faces several challenges, including: 1. Inequitable distribution – some LGUs receive less IRA despite having higher revenue collection performance and population. 2. Corruption – some LGUs misuse their IRA funds, leading to poor service delivery and lack of accountability. 3. Lack of capacity – some LGUs lack the capacity to plan, implement, and monitor their programs and projects effectively.

What are the Solutions to These Challenges?

To address these challenges, the government and LGUs can do the following: 1. Review and revise the IRA formula to ensure equitable distribution. 2. Strengthen oversight and accountability mechanisms to prevent corruption and misuse of funds. 3. Provide capacity-building programs and technical assistance to LGUs to enhance their planning and management skills.

Conclusion

In conclusion, IRA is a critical component of the country’s governance system. It enables LGUs to provide essential services and implement development projects that benefit their constituents. However, the allocation of IRA faces several challenges that need to be addressed to ensure its effective and efficient utilization.