Determination of tax allotment shares for LGUs clarified

MANILA, Philippines — The Department of Finance (DOF) has reaffirmed its commitment to transparency and strict compliance with the Supreme Court (SC) decision and relevant laws in determining the National Tax Allotment (NTA) shares for local government units (LGUs).

“We assure our LGUs that we are strictly adhering to transparency and accountability, especially with the principles set by the Supreme Court, in implementing the Mandanas-Garcia ruling. Nothing is shortchanged. We are very much welcome and open to having continued dialogues with our LGUs to help them strengthen their fiscal capacities and optimize resource utilization to deliver more and better services to Filipinos,” Finance Secretary Ralph Recto said.

The 2019 Mandanas-Garcia ruling of the SC, which took effect in 2022, increased the NTA shares of LGUs to 40% of all national taxes beyond those collected by the Bureau of Internal Revenue (BIR). This adjustment was intended to enhance the fiscal autonomy of LGUs by granting them a more substantial share of the national tax base.

In its decision, the SC ordered the Secretary of the DOF, the Secretary of the Department of Budget and Management, the Commissioners of the BIR and the Bureau of Customs, and the National Treasury, to include all national tax collections in the computation of the NTA base, “except those accruing to special purpose funds and special allotments for the utilization and development of the national wealth.”

In determining the deductions, the DOF is guided by the SC decision, including Section 29 (3), Article VI and Section 7, Article X of the 1987 Constitution. 

The Finance chief is set to meet the League of Cities this week to discuss the computation of the NTA.