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Alvarez: No more IRA under federalism; poor regions to be grouped with rich ones

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House Speaker Pantaleon Alvarez on Tuesday said new states under the federal setup would no longer need Internal Revenue Allotment (IRA), or the share of local government from the national government.

The Speaker noted that under the proposals pending in the House of Representatives, the future states or regions will already be able to generate from “80-85 percent” of their own income, with only the remainder going to the central government.

“Tingin ko wala nang IRA yan, kasi 80-85 percent of your income na sa yo na,” he said in an interview with reporters.

One proposal in the House committee on constitutional amendments is to have 80 percent of tax revenues going to regions with only 20 percent going to the federal state.

Currently, 60 percent of tax revenues goes to the national government while the rest is distributed to local government units.

Alvarez said such a setup would not necessarily disadvantage poorer regions.

“May formula kasi dyan. Yung mga regions na talagang mahirap pwede natin yang isama sa region ng mayaman, para kaya silang buhatin ng region na yon,” he said.

If that’s not enough, a special fund may be created to support poorer regions, he said, citing similar schemes in other countries, including Malaysia’s Special Equalization Fund.

“All other regions, halimbawa, Davao Region mayaman yan, isama yan sa Caraga na mahirap na region. Halimbawa Region 8, pwedeng isama yan sa Region 7, kasi mayaman ang mga taga-Region 7,” Alvarez said.

“The point is dun sa concept na talagang magkakaroon ng competition. Pagalingan yan e, bawat state. Pwede silang gumawa ng kanya kanyang policies, economic policies upang sa gayon ay mahikayat nila ang investors,” he said.

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