Local government units (LGUs) will receive a bigger share of national taxes by 2027, as the Supreme Court’s Mandanas ruling will be fully implemented by then, a Cabinet member and a Boholano lawmaker have confirmed to The Bohol Tribune.
This was announced by Finance Secretary Benjamin Diokno during a budget briefing on February 28, 2023, where he discussed the implications of the landmark decision on LGUs’ finances and services.
The Mandanas ruling is a result of two petitions filed by Batangas Governor Hermilando Mandanas and former Bataan Governor Enrique Garcia Jr. before the Supreme Court in 2012 and 2013, respectively. They argued that the Internal Revenue Allotment (IRA) of LGUs should include not only internal revenue taxes but also other national taxes such as customs duties.
The Supreme Court agreed with them and ordered the government to adjust the IRA formula starting in 2022. This would increase the IRA of LGUs by P234.4 billion to P1.8 trillion, which is 27.6 percent more than the previous years.
However, Diokno said that the full implementation of the ruling would take time because it would require a devolution of functions and responsibilities from the national government to LGUs.
He said that President Bongbong Marcos had formed an inter-agency committee composed of representatives from
the Department of Finance (DOF), Department of Budget and Management (DBM), Department of Interior and Local Government (DILG), and National Economic Development Authority (NEDA) to oversee this process.
Meanwhile, Diokno has assured Bohol First District Representative Edgar Chatto, who raised some concerns about the impact of
the Mandanas ruling on LGUs’ services, that LGUs would still follow the Local Government Code but with a new formula for their IRA, now called National Tax Allocation (NTA).
Chatto also asked Diokno about how inflation would affect the 2023 national budget and how timely fund releases from Central Authority could improve program implementation by agencies and LGUs.
Diokno said that inflation was under control and that no adjustments were needed for now. He added that he would discuss this matter with other members of the Development Budget Coordination Committee (DBCC) in April.
He also said that Central Authority was committed to releasing funds promptly and efficiently.
Meanwhile, Chatto appealed to Bangko Sentral ng Pilipinas (BSP) Governor Felipe Medalla, who was also present at the briefing, to push through with the Bohol branch project.