Sotto bats for bigger LGU share for hosting factories

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    SENATE President Vicente Sotto III has filed a bill to seeking to give local government units a larger share of revenues from business operations conducted in their covered areas, effectively reducing the share of metropolitan areas where the principal offices of companies are located.

    Sotto’s Senate Bill No. 494 seeks to amend the revenue-sharing formula under Section 150 of the 28-year old Local Government Code and to address the appeal of LGUs outside Metro Manila for additional income from businesses in their jurisdictions.

    “Most LGUs outside Metro Manila were left behind by those within the metropolis in terms of providing basic services, development and economic growth,” Sotto said.

    SBN 494 proposes to allocate 90 percent of sales of manufacturers, contractors, producers, plants, and plantations to the LGU where their factories or project offices are located.

    The remaining 10 percent of the sales will be allocated to the LGU in which the principal office of the company is located.

    The current formula is 70-30.

    In the case of plantations located in an LGU different from that of the factories, the 90-percent allocation will be subdivided 60-40 in favor of the LGU hosting the factories.

    Companies with factories in different LGUs will distribute the 90-percent portion on a pro-rated basis depending on the respective volumes of production.

    Under the law, LGUs are empowered to impose local business taxes on sales, on top of the taxes collected by the national government.