Concerns raised earlier by local government units on how the trillion-peso National Tax Allotment is computed have been resolved during a “productive” dialogue yesterday between city mayors and the Department of Finance (DOF).
“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,” Finance chief Ralph Recto said in a statement.
The Department of Budget and Management released Local Budget Memorandum No. 90-A last December 26, which showed the tax allotment shares of local government units (LGUs) has been set at P1.03 trillion, which will be distributed to 43,634 LGUs this year.
In comparison, DBM data showed the tax allotment share of LGUs stood at P871.38 billion last year, which benefitted 43,622 LGUs.
It was earlier reported that Baguio City Mayor Benjamin Magalong, along with the anti-corruption movement group, Mayors for Good Governance, sought a meeting with Recto to discuss how much LGUs should actually receive as they seem to be “short changed.”
During the meeting, Recto provided a detailed line-by-line briefing on the tax allotment computations, ensuring full alignment with the principles of the
2019 Mandanas-Garcia Supreme Court ruling and relevant laws, the Finance department said.
Present at the briefing were Magalong, Quezon City Mayor Joy Belmonte and Dumaguete City Mayor Felipe Antonio Remollo.
Meanwhile, a comparison of the computations between the LGUs and the Finance department was also discussed, revealing that the calculations and deductions under various laws were more or less aligned.
The city mayors were thankful to the agency for the dialogue and its openness to listen and address their concerns.
The finance department likewise said that Magalong, in particular, expressed his apologies to Recto for his earlier remarks suggesting that LGUs were being shortchanged in their tax allotments.
Recto assured the mayors that he is just “one call away” and that the department is always open to having dialogues with LGUs to help them strengthen fiscal capacities and optimize resource utilization so they can deliver more and better services to Filipinos.
The 2019 Mandanas-Garcia ruling of the Supreme Court (SC), which took effect in 2022, increased the tax allotment shares of LGUs to 40 percent of all national taxes beyond those collected by the Bureau of Internal Revenue, the department said.
The adjustment was intended to enhance the fiscal autonomy of LGUs by granting them a more substantial share of the national tax base, it added.
In its decision, the High Court ordered the secretaries of finance and of the Budget Department, as well as commissioners of the internal revenue bureau and the Bureau of Customs, and the national treasurer to include all national tax collections in the computation of the tax allotment 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 Finance department said it is guided by the Supreme Court decision, including Section 29 (3), Article VI and Section 7, Article X of the 1987 Constitution.
During the dialogue, Recto was joined by his Chief of Staff Maria Luwalhati Dorotan Tiuseco; Undersecretary Charlito Mendoza, Undersecretary Bayani Agabin; Assistant Secretaries Karlo Adriano, Allan Quebral and Danielle Culangen, as well as representatives from the Bureau of Local Government Finance Bureau of the Treasury, and the Bureaus of Internal Revenue and of Customs.