DOF resolves issues on tax shares of LGUs

MANILA, Philippines — In a dialogue with city mayors yesterday, Finance Secretary Ralph Recto addressed concerns on the computation of national tax allotment (NTA) shares for local government units (LGUs).

The meeting provided a comprehensive explanation of NTA computations, ensuring they adhered to the 2019 Supreme Court Mandanas-Garcia ruling and relevant constitutional provisions.

Recto presented a detailed line-by-line breakdown to clarify the methodology and dispel misunderstandings.

Among those in attendance were Baguio City Mayor Benjamin Magalong, Quezon City Mayor Joy Belmonte and Dumaguete City Mayor Felipe Antonio Remollo.

“We did not change or amend anything. This is based on the Supreme Court ruling and a Development Budget Coordination Committee resolution, which was made in consultation with the LGUs. We are very transparent,” Recto said.

The dialogue included a review of computations between the Department of Finance (DOF) and LGUs, revealing that both parties’ figures and deductions were largely consistent under various laws.

Magalong, who had previously expressed concerns that LGUs were being shortchanged in their NTA shares, expressed his apologies to Recto during the meeting. The mayors collectively expressed their gratitude to the DOF for its openness and transparency.

In response, Recto reassured the mayors of the DOF’s continued support, stating he is “just one call away” and that the department is always open to dialogue with LGUs to strengthen their fiscal capacities and optimize resource utilization.

The 2019 Mandanas-Garcia ruling, implemented in 2022, expanded LGUs’ NTA shares to include 40 percent of all national taxes, beyond those collected by the Bureau of Internal Revenue. This adjustment was intended to bolster LGU fiscal autonomy, enabling them to have a more equitable share of national revenues.

The Supreme Court also mandated that all national taxes – excluding special purpose funds and allotments for natural wealth development – be factored into the NTA base. These computations were guided by provisions under the 1987 Constitution.