LGUs to receive higher budget

MANILA, Philippines — Local government units (LGUs) are set to receive a bigger chunk of the national budget after the Supreme Court increased the Internal Revenue Allotment (IRA) for cities, municipalities and provinces.

The SC ordered that the IRA would now include tax collections of other agencies apart from the Bureau of Internal Revenue (BIR).

In a landmark ruling, the high court voted 10-3 during its weekly full-court session on Tuesday to partially grant the petition filed by Batangas Gov. Hermilando Mandanas who had questioned the process of allocating IRA funds for the LGUs.   

The ruling effectively allows allocation of bigger IRA funds for LGUs under the national budget. 

“The Court interpreted the basis for the ‘just share’ of local government units under Section 6, Article X of the 1987 Constitution as being based on all national taxes and not only national internal revenue taxes, as provided in Section 284 of the Local Government Code,” the SC public information office reported yesterday.

Section 284 of Republic Act 7160, the law which created the LGUs, stated that provincial, city and municipal governments must receive 40 percent of the total national internal revenue taxes collected by the central government.

Internal revenue taxes, meanwhile, refer to taxes imposed by the BIR such as income taxes, estate and donor’s taxes, value-added tax, excise taxes and documentary stamp taxes.

Article X Section 6 of the 1987 Constitution, on the other hand, stated that LGUs “shall have a just share, as determined by law, in the national taxes which shall be automatically released to them.”

The national taxes under the Charter include not only BIR collections, but also Bureau of Customs tariffs as well as taxes collected by other state agencies such as the Bureau of Immigration.

It was not clear, however, whether the ruling could be implemented this year as the SC has not immediately released a copy of the ruling pending signatures of all justices.