Fedelin, Nyna Micah C.

Sir Abvic Maghirang

MPA 618 Fiscal Policy and National Development

1. Does an increase in the IRA in your Local Government Unit actually increase its spending power?

IRA stands for Internal Revenue Allotment which was allocated to transfer to different
levels of local governments. It is distributed based on population and land area. Its purpose is
the decentralization of some fiscal decisions to LGU to efficiently deliver public services to the
local population. The local government of Naujan, Oriental Mindoro is a first-class municipality
and it also has the biggest land area in Oriental Mindoro. Having a large land area means Naujan
receives a large share of IRA, however, it is a first-class municipality that has various sources of
revenue. An increase in IRA will add to the other source of revenue of LGU thus results in
additional funds for spending. To answer the question, yes, an increase in the IRA in our LGU
increase our spending power. Due to our big land area and population, it does need support
from the national government to sustain the services to the local population.

2. What are the local sources of revenue of your LGU? How do they factor in the spending capacity
of the LGU in relation with the IRA?

The town of Naujan's revenues came from operations of slaughterhouse, cemetery,

public market, and Bahay Tuklasan Center aside from local taxes, permits and licenses, services,
and business incomes. Naujan achieved being the first-class municipality by promoting
investment in our town, however, Naujan’s sources of income are not enough to sustain due to
our large population and land area. For that same reason, Naujan receives a big amount of IRA,
which results in the IRA’s contribution being bigger than the local source fund. Hence, Naujan is
dependent on IRA. With a limited source of income, Naujan’s spending capacity is reliant on IRA.

3. What are the possible impact of the "Mandanas Ruling" as far as the revenue generation
capacity of your LGU?

Mandanas- Garcia's ruling resulted from the petition made by Batangas Governor
Mandanas and former Bataan Governor Garcia which appeals that LGU shares should include all
national taxes. At present, LGU’s IRA comes from 40% of national internal revenue taxes that are
collected by the Bureau of Internal Revenue. With the implementation of the Mandanas-Garcia
Ruling, the IRA that will be received by LGUs will increase. In my opinion, the increase of IRA will
result in, further dependency on IRA. Additionally, more LGUs will not address the need of
having their source of revenue besides IRA. On a positive point, an increase in IRA will help LGUs
who are dependent on IRA to increase their spending capacity to address the needs of the local
population.