Bill pushes direct taxes for host LGUs

BAGUIO CITY — Host local government units (LGUs) may soon directly receive their rightful share from National Wealth Taxes paid by large corporations once a proposed amendment to the Local Government Code is enacted.

Baguio Representative Mauricio G. Domogan has filed House Bill (HB) No. 6262 seeking to amend Section 290 of Republic Act (RA) 7160, or the Local Government Code of 1991, to ensure that LGUs immediately and directly receive their mandated share of national wealth tax collections.

Under the current law, 40 percent of all internal revenue collections from the utilization and development of national wealth — such as mining, forestry, and fishery operations — should go to host LGUs. These collections include taxes, royalties, fees, charges, fines and the national government’s share in co-production or joint venture agreements.

However, Domogan noted in the bill’s explanatory note that many LGUs have long complained of delays and incomplete remittances from the national government, despite large corporations paying their dues.

He stressed that these delays result in financial losses for local governments that depend on these funds for development and service delivery.

Domogan added that while Section 286 of the LGC mandates the “automatic release” of the National Tax Allotment, no similar explicit provision exists for LGUs’ share of national wealth collections — creating uncertainty and prolonged waiting periods.

Complicating the problem is the tax payment setup of private entities. Many corporations maintain principal offices in major urban centers rather than in the LGUs where their mining, logging, or other extractive operations actually occur. Under the Corporation Code, these entities may pay national taxes in the location of their principal office, further slowing down the remittance process to host communities.

Domogan cited Benguet Province as a prime example, saying that despite being home to major gold and copper mines, many host communities continue to experience poverty. “The natural resources are extracted, but the local governments have allegedly not received their due share,” he said.

He emphasized that these issues make the amendment necessary to ensure fiscal justice for resource-hosting LGUs.

The congressman urged his colleagues in the House to support the measure and encouraged the filing of a counterpart bill in the Senate.

HB 6262 has been formally referred to the appropriate committee in the House of Representatives for evaluation.