By ALFREDO P HERNANDEZ
THE municipality of Jose Panganiban fears it would have to slow down on certain vital development-oriented projects with the cutback in internal revenue allotment (IRA) this year.
A source from the local government unit (LGU) said the funding slash is substantial, as far as funding the municipality’s projects are concerned, without disclosing the IRA amount that could be lost.
But Mayor Ricarte Padilla is looking forward to a possible new funding source that could replace the soon-to-be-lost IRA.
Padilla is referring to a subsidy scheme being pitched by Senator Francis Joseph “Chiz” Escudero.
He has proposed to the national government to dispense with additional funds to local government units, which will be affected by the funding cut.
IRA refers to a local government’s share of income from the national government. The amount of allocation is based on a local government’s land area and population.
Escudero said: Local governments are the front lines in basic social services … when you cut their IRA share, there follows the disruption of health services, food security, infrastructure and public works.
In effect, he is proposing a subsidy scheme to the tune of P13 billion that would compensate for LGUs funding loss due to IRA cuts that will take effect this year.
In Jose Panganiban, Ricarte revealed that his municipality has been bracing itself for the IRA cut.
He said that the municipality of second-class category generates only an annual income of more than P45 million.
“We have found it hard to make ends meet with our income as second class municipality and here comes this cut in the IRA … kudos to Sen Chiz …for that proposal,” Padilla was quoted by Southern Luzon Business Review as saying.
The municipality’s population in 2007 was a little more than 80,000 spread in 27 baranggays.
Jose Panganiban’s only major tax contributors are the Johson Gold Mining Corp (JGMC) in Bagumbayan and the Pan Century Surfactants Inc in Baranggay Osmena, an export-oriented concern.
The rest of its tax revenues would come from commercial business establishments and real estate operators. Revenue from community residence tax (cedula) and other municipal fees are said to be negligible.
Because of the impending IRA cut, Padilla earlier appealed to all sectors in the municipality to pay their respective taxes.
He is referring to businesses, companies and individuals from whom certain form of taxes are due the government every year.
The proposed IRA for the year 2012 is P273 billion – down from P287 billion last year – due to the “sharp decrease in revenues in 2009 as the global economic crisis and revenue-eroding measures passed at that time.”
Escudero said the resulting P13 billion fiscal gap due to the decrease in IRA should be bankrolled by the national government “in light of the hundreds of billions in savings the Palace has accumulated in the past months.”