Revision of National Internal Revenue Allotments

The decree establishes that the national internal revenue allotment system is revised to produce a more equitable distribution of funds among local government units.
The decree requires administrative simplicity and efficiency in allotment distribution.
The decree introduces a developmental concept in the allocation of funds to local governments.
The decree frames the tax system as an instrument for income redistribution and reforms in the new society.

Twenty per centum (20%) of collections from national internal revenue taxes not otherwise accruing to special funds and special accounts in the general fund accrues to local governments.
The allotment is computed based on the collections of the third fiscal year preceding the current fiscal year.
The decree directs that the funded allotments be distributed among provinces, municipalities, and cities according to specified percentages.

Thirty per centum (30%) of the local governments’ allotment goes to provinces.
Forty-five per centum (45%) of the local governments’ allotment goes to municipalities.
Twenty-five per centum (25%) of the local governments’ allotment goes to cities.
Each local government unit’s share is determined by a formula using the specified weighting factors.

Seventy per centum (70%) of the share is based on Population.
Twenty per centum (20%) of the share is based on Land Area.
Ten per centum (10%) of the share is based on Equal Sharing.
After the transition period, shares are determined solely on the basis of these formula components.

For the first three fiscal years of implementation (FY’s 1974, 1975 and 1976), a local government’s annual allotment cannot increase by more than fifteen per centum (15%).
For the first three fiscal years of implementation, a local government’s annual allotment cannot decrease by more than fifty per centum (50%).
The comparison point is the local government’s actual allotment during fiscal year 1970-71.
After these three fiscal years, shares are determined solely by the formula components stated in the decree.

A Barrio Development Fund is created.
The fund is constituted from ten per centum (10%) shares of the barrios in real estate tax collections under Republic Act No. 3590 (the Revised Barrio Charter).
The fund also includes annual contributions from each province, city and municipality in an amount not exceeding P500 per barrio.
The fund is spent solely for community development projects that meet the requirements set by the Secretary of Local Government and Community Development.
The Provincial Treasurer serves as custodian and must maintain a special account for the fund in the provincial books.
Releases of the fund are made through the Municipal Treasurer concerned, who must be responsible for proper disbursement and accounting.

Each province, city and municipality must appropriate in its annual general fund budget no less than twenty per centum (20%) of its annual allotment for development projects.

Development plans of local units are subject to approval by the Secretary of Local Government and Community Development.
The Secretary must issue the necessary guidelines for development-plan approval.

In addition, five per centum (5%) of collections from national internal revenue taxes not otherwise accruing to special funds and special accounts in the general fund accrues to a local government fund.
The fund is released by the President as financial aid to local governments or to projects.

The Secretary of Finance must issue the necessary rules and regulations for the prompt and effective implementation of the decree.
The Department of Finance issues administrative measures to facilitate implementation, including Finance Order No. 13-73 dated April 5, 1973 on allotments of revenues to local governments.
The Department of Finance issues administrative measures on preparation and submission of financial aid requests, including Finance Provincial Circular No. 21-73 dated August 15, 1973.

All laws or parts of law inconsistent with Presidential Decree No. 144 are revoked or modified accordingly.