Bureau of Local Government Finance Opinion

June 7, 2000 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Hon. Alan Peter S. Cayetano Chairman, Oversight Committee on Bases Conversion House of Representatives Quezon City S i r : This refers to your letter dated May 29, 2000 concerning House Bill No. 9461 entitled: "An Act Providing for a Direct Remittance Scheme to the LGUs, amending for the purpose Republic Act No. 7227 otherwise known is the `Bases Conversion Development Act of 1992'." This Bureau fully agrees that LGUs affected by R.A. No. 7227 should likewise be afforded easy access to find due them from enterprises within the ECOZONES thru the direct remittance of their 2% share from the Gross Income Earned by all business establishments therein. However, the said 2% share of LGUs have apparently failed to include the importance and the critical role of the provincial government over its municipalities or component cities. It should be noted that, among the taxes that were affected by the incentives that favored Ecozone Developers include real property taxes which provinces levy thru an enabling Ordinance, hence, it is also deemed that it is only proper to include also the province as among the beneficiaries of the 2% local government share from the said Gross Income Earned by businesses and enterprises within the Subic Special Economic Zone and the Clark Special Economic Zone. It is also, recommended that the 2% share of LGUs affected by the declaration of the zone be directly remitted instead to the province for proper apportionment to the local government units within its jurisdiction. IcEaST As regards the provision on the proposal to impose real property taxes on the land owned by developers, the same should clearly state that it shall cover existing developers or business despite its previous contracts with the Subic Special Economic Zone or the Clark Special Economic Zone. On the other attached Bill, authored also by Representative Antonino P. Roman, which among others, seeks to reduce the share of the National Government (NG) from three percent (3%) to two Percent (2%), this Bureau deems the move to be inappropriate especially when NG is experiencing budgetary deficits that it can not afford a clear 33% loss from the revenues it expects from the abovementioned economic zones. Hence, our disagreement with the said proposal. Very truly yours, (SGD.) ANGELINA M. MAGSINO Deputy Executive Director Officer-in-Charge