Local exec says increased IRA won’t hurt economy

MANILA, Philippines — Batangas Gov. Hermilando Mandanas has refuted the Department of Finance’s claim that the Supreme Court’s ruling in favor of local government units’ increased Internal Revenue Allotment (IRA) could result in deficit for the economy. 

Mandanas disagreed with the position of Finance Secretary Carlos Dominguez that increased IRA might cost the national government a whopping P1.5 trillion if the SC ruling is implemented retroactively since the Local Government Code of 1991 took effect in January 1992. 

“It’s not true that following the SC decision on the increase of IRA, it will increase the country’s deficit. It’s also not true that there will be debt increase due to legal increase of IRA,” he said.

“All that has to be done by the national government is to recast the 2019 budget. There is more than enough time, like by funding the devolved services passed down from national to local.”

The executive branch should also “reduce funds to be appropriated for national line agencies doing devolved services in violation of the principle of subsidiarity in the 1987 Constitution and the Local Government Code,” he added.  

Mandanas and the late Bataan governor Enrique Garcia Jr. both fought for the automatic allocation of IRA to local government units as provided for in the 1987 Constitution.

Mandanas also advised the executive branch to allow LGUs to “do the farm-to-market roads and town public markets; distribute medicines, ambulances, rural water system, irrigation, barangay health clinics, community pharmacies; and (do the) local Build Build Build projects.” 

The Department of Budget and Management (DBM) should also immediately heed and comply with the SC decision upholding the LGUs position that all internal revenue allotments be sourced from national internal revenue taxes.

“We call on the DBM to come up with a viable plan on how the IRA backpay could be efficiently distributed immediately to LGUs,” said Camarines Sur Rep. LRay Villafuerte.

“We commend the Supreme Court for this landmark ruling as this would be of immense help in boosting the economy of LGUs once we commence the shift to a federal system of government,” he added.

As per the estimates of Mandanas and former Senate president Aquilino Pimentel Jr., the father of the Local Government Code, all national taxes that were withheld from LGUs amount to about P800 billion from 2010 to 2016 alone.  

 The SC ruling held that DBM should reimburse the LGUs full IRA due to them since 1992. 

 “A much higher IRA share would certainly boost the fiscal autonomy of LGUs ahead of the imminent switch in government structure from the presidential to the federal system,” said Villafuerte, who is also one of the key advocates of federalism in Congress.  

 Villafuerte noted that President Duterte, being the former mayor of Davao City, can relate to the SC verdict, and is fully “aware of the importance of the IRA in financially empowering LGUs and how this would help jumpstart the shift to federalism.”