DBM: SC ruling on IRA to cost gov't P160-B next year
MANILA, Philippines — The landmark Supreme Court ruling ordering the immediate release of a higher share of national government revenue to local government units would cost around P160 billion next year, Budget Secretary Benjamin Diokno said Wednesday.
In a 42-page decision released Monday, the high court said the “just share” of LGUs should be computed and sourced from all national taxes, and not just from internal revenue collections. The implementation of the tribunal’s decision is prospective.
The SC also directed the “automatic” release of increased transfers from the central to local government units “without need of further action,” adding that the adjustments in internal revenue allotment of LGUs need not wait for next year's General Appropriations Act, which would still undergo legislative approval.
At a breakfast forum, Diokno said policymakers “fear” that applying the SC’s ruling to fiscal year 2019 might disrupt the government’s funding priorities, as the decision could have “implications” on future budgets.
He also said the Department of Budget and Management has sought the help of the Office of the Solicitor General to appeal the court’s ruling.
“Given the significance of the impact of the decision, we expect that the Supreme Court en banc will take its time to meticulously thresh out the issues and reconsider its decision,” Diokno said.
“Nevertheless, the DBM will faithfully comply with the Supreme Court’s decision once it has become final and executory,” he added.
Two of the so-called “Big Three” debt watchers, Fitch Ratings and Moody’s Investor Service, earlier warned of the SC ruling’s fiscal risk. The inter-agency Development Budget Coordination Committee, meanwhile, will deliberate on the next steps of the government following the SC ruling.
Finance Secretary Carlos Dominguez III earlier said the prospective application of the SC ruling would be manageable for the national government, as the IRA arrearages could reach P1 trillion to P1.5 trillion if the decision is retroactively implemented.
Dominguez also said the Department of Finance is open to devolving some functions of the national government to LGUs to comply with the SC’s ruling.
President Rodrigo Duterte submitted to the House of Representatives on Monday the proposed P3.757-trillion budget for 2019, the first ever to be cash-based, after he delivered his State of the Nation Address.
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