LGUs to receive 35% NTA share in ‘26

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Local government units (LGUs) can expect to receive as much as 35 percent national tax allotment (NTA) shares by next year, which is already net of earmarked exemptions, according to Finance Secretary Ralph Recto.

In an interview with reporters at the Department of Finance (DOF) office in Manila yesterday, Recto said LGUs are currently receiving 32 percent of national taxes and are set to receive 35 percent by 2026.

While the 2019 Mandanas-Garcia ruling of the Supreme Court, which took effect in 2022, increased the NTA shares of LGUs to 40 percent of all national taxes beyond those collected by the Bureau of Internal Revenue, Recto clarified that this does not include earmarked funds, for example, revenues from sin taxes intended for health programs.

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“Today they’re getting roughly 32 percent, we calculated that it will go up to about 35 percent by 2026, more or less. We have calculations (since) there is a law that will expire this year, particularly the TRAIN (Tax Reform for Acceleration and Inclusion Law), with the earmarking to expire five years from effectivity of the law. So that by 2026 there will be additional revenue for the LGUs,” Recto said.

Thus, the NTA shares are not expected to reach 40 percent of all national taxes, as Recto said the computation has several exemptions, including those that are earmarked as well as all special purpose funds and special allotments, which are all deducted consistent with the Supreme Court ruling.

“I think what is important is no one is shortchanging the local government. And as promised, we are very transparent. We show them all the calculations,” Recto said.

Earlier this week, the DOF had a dialogue with city mayors amid concerns raised on the computation of the NTA shares for LGUs. It was earlier reported that Baguio City Mayor Benjamin Magalong, along with the anti-corruption movement group Mayors for Good Governance, sought for a meeting with Recto to discuss how much LGUs should receive as they seem to be “shortchanged.”

During the meeting, Recto provided a detailed line-by-line briefing to the city mayors on the NTA computations, ensuring full alignment with the principles of the 2019 Mandanas-Garcia Supreme Court ruling and relevant laws, the DOF said. 

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