MANILA, Philippines — Local government units (LGUs) would be getting 35 percent of the national taxes beginning next year as earmarking of the incremental increases in state revenues is set to expire, the Department of Finance (DOF) said.
Finance Secretary Ralph Recto said LGUs’ national tax allotment (NTA) shares next year would increase from the current 32 percent as the earmarking of higher revenues generated from additional taxes under the TRAIN Law would expire this year.
“By 2026, there will be additional revenues for the local government units,” Recto said yesterday.
He explained that the DOF calculated the LGUs’ NTA based on the 2019 Mandanas-Garcia Supreme Court ruling, opinion of the Department of Justice and a Department of Budget and Management resolution concerning the matter.
The computation followed the Supreme Court ruling including the deduction from the NTA of earmarked funds, special purpose funds and special allotments like those for the Bangsamoro Autonomous Region in Muslim Mindanao.
“I think what is important is no one is shortchanging the local government. And as promised, we are very transparent. We showed them all the calculations,” Recto said.
“I reminded them (LGUs) that the President was a former governor. He understands local government. We are interested to make sure that the local governments get their fair share,” he added.
The finance chief said at least “99 percent” of the issues surrounding the LGUs’ NTA had been settled during his meeting with some local chief executives recently .
Recto met with Baguio City Mayor Benjamin Magalong, Quezon City Mayor Joy Belmonte and Dumaguete City Mayor Felipe Antonio Remollo last Monday to discuss the NTAs.
The DOF chief said the city mayors expressed their gratitude for the dialogue and the agency’s openness to listening and addressing concerns, with Magalong reportedly even expressing his apologies to Recto for his earlier remarks, suggesting that the LGUs were being shortchanged in their NTAs.
The 2019 Mandanas-Garcia ruling, which took effect in 2022, increased the NTA shares of LGUs to 40 percent of all national taxes beyond those collected by the Bureau of Internal Revenue.
Citing the SC ruling, the DOF noted that all national tax collections shall form part of the NTA base “except those accruing to special purpose funds and special allotments for the utilization and development of the national wealth.”
The DOF said it is guided by the SC decision including Section 29 (3), Article VI and Section 7, Article X of the 1987 Constitution in determining the deductions.