Palace says expanded revenue share of LGUs can't be disbursed before 2022

MANILA, Philippines — A Supreme Court ruling that would raise the budget allotted to local government units by 2022 could not be implemented early because it could bloat the country's fiscal deficit, Malacañang said Thursday. 

Presidential spokesperson Salvador Panelo said Finance Secretary Carlos Dominguez discussed the possible early implementation of the high court's ruling in the case of Mandanas vs Ochoa during a Cabinet meeting last Wednesday.

The 2018 ruling states that the “just share” of LGUs should be based on all national taxes, not just on national internal revenue taxes. The court has also ruled that the new basis for computing the LGUs' share of national government revenue would begin to take effect in 2022.

READ: LGUs to receive expanded revenue share in 2022, says SC 

League of Provinces of the Philippines president and Marinduque Gov. Presbitero Velasco Jr. previously urged the Duterte administration to automatically release the LGUs’ just share in all national taxes beginning July 1, 2019 and thereafter when the high court's final decision had already lapsed into finality.

Panelo said the new computation of Internal Revenue Allotment for LGUs may not be implemented before 2022 because of the need to fund the president's various programs.

READ: Duterte lowers dividend rates of DBP and Lank Bank

"Due to the various commitments of the president to the people, such as the implementation of programs designed to combat criminality and corruption, as well as activities of the national government to promote human development and poverty reduction, to name a few, it was agreed that the adjustment of the IRA may not be feasibly effected during this administration," Panelo said in a statement.  

"Otherwise, there will be an unmanageable fiscal deficit, while securing loans will be more expensive to the nation as the citizenry will be paying for higher rates," he added. 

Panelo noted that the postponement of the adjustment of the IRA of LGUs until 2022 is in accordance with the ruling by the Supreme Court. Under the ruling, the expanded basis for calculating the share of local government units in the national taxes will be prospectively effective starting from the 2022 budget cycle pursuant to the doctrine of operative fact.

READ: Federalism: What Filipinos need to know