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Changes sought to facilitate municipality conversion

Interior Secretary Ronaldo V. Puno is pushing for a review of the Local Government Code, particularly the internal revenue allotment (IRA) provision, to facilitate the conversion of towns to chartered cities.

Mr. Puno said the upgrading of towns to cities have an impact on revenues of other local government units (LGU) as many would share the IRA.

"I think this requires Congress to revisit the Local Government Code and reapportion the sharing of revenues, particularly the shares of towns, provinces and cities. This is the main contention of existing cities against municipalities that want to convert into cities," Mr. Puno said in a press conference here last week.

He cited the case of Rizal, his family’s home province in Luzon. When Antipolo became a city, its income ballooned to P350 million in 1998 from P125 million. Antipolo now earns P1.07 billion a year against the provincial budget of P1 billion. The province effectively lost 20% of its share from national taxes after Antipolo became a city.

"There are no available resources for LGUs affected by upgrading of towns. This needs legislative review but it would take time," he said.

Mr. Puno said the territory and population of an LGU should be given equal weight with that of annual income requirement when considering the conversion of towns into cities.

He cited Makati "which has P10 billion in revenues but its land area is nowhere half of Basilan."

The League of Cities of the Philippines, a group of cities, is waging another lobby against House Bill 6303, which seeks to amend Section 450 of Republic Act 7160 (Local Government Code of 1991) in the income requirement of municipalities that seek city-hood conversion.

The bill, authored by Leyte Rep. Carmen L. Cari (5th district), wants to exempt from the income requirement municipalities that sought to be converted into cities under bills filed before June 30, 2001.

Municipalities whose city-hood charters have been enacted into law will also be exempted from the income requirement

The 16 towns, which had been converted to cities but reverted to towns, had sought exemption from the income requirements in city-hood laws passed last year.

They have annual locally generated incomes ranging from P62 million to P82 million.

The Supreme Court junked the city-hood status of 16 municipalities as it violated the Constitution’s equal protection clause on fair and just distribution of national taxes to local government units.

The 16 towns are Baybay in Leyte province; Bogo in Cebu; Catbalogan in Samar; Tandag in Surigao del Sur; Borongan in Eastern Samar; Tayabas in Quezon; Lamitan in Basilan; Tabuk in Kalinga; Bayugan in Agusan del Sur; Batac in Ilocos Norte; Mati in Davao Oriental; Guihulngan in Negros Oriental; Cabadbaran in Agusan Del Norte; Carcar in Cebu; El Salvador in Misamis Oriental; and Naga in Cebu. — Francis Allan L. Angelo, Business World

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