Local government units (LGUs) must prepare themselves to effectively assume new responsibilities with the implementation beginning 2022 of the Supreme Court (SC) ruling on the far higher internal revenue allotment (IRA) share of LGUs, the country’s finance chief said.
Carlos Dominguez, Department of Finance secretary, said in a virtual event yesterday local executives should start working with the national government in preparing for the seamless transfer to their offices of the additional devolved functions, services and facilities that they would have to assume.
“The significant increases in our share of IRA should help LGUs pump prime their local economies,” Dominguez said.
The Supreme Court ruling on the Mandanas case is scheduled for implementation in 2022.
Under the high court’s Mandanas doctrine, the IRA share of LGUs should come from all national taxes, as mandated under the 1991 Local Government Code, and not just from the taxes collected by the Bureau of Internal Revenue within the respective jurisdictions of LGUs.
This expanded revenue coverage means the IRA share of LGUs should also include other taxes such as those collected by the Bureau of Customs.
“As we anticipate a new economy in the post-pandemic era, we strongly encourage our LGUs to adopt digital technologies to efficiently deliver frontline services,” Dominguez said in the webinar hosted by the Union of Local Government Authorities of the Philippines.
“This should include the processing of business registration and the collection of local taxes. Investments in information technology will not only make for more responsive governance, it will improve revenue generation of our LGUs,” he added.
During the webinar, Dominguez expressed confidence in the country’s ability to regain its growth momentum by next year, powered by several fiscally responsible economic stimulus measures and supported by a strong financial position.
“We remain confident that we will win back our growth momentum by next year. A lot will depend on whether we can revive consumer confidence and domestic demand,” he said.
Dominguez added as the end of the public health emergency triggered by the pandemic remains uncertain, the government should continuously build up its fiscal resilience by optimizing the revenue generation capacity at both the local and national levels, and improving tax administration.
He also said the national government will continue to rely on LGUs for continued monitoring and contact tracing of possible COVID-19 infections even with the early signs of improvement in the public health situation, as well as in reviving economic activities in the coming months. – A. Celis
