Camarines Sur Rep. LRay Villafuerte is calling on the incoming crop of local elective executives in 2022 to focus on crafting their respective development masterplans that would further strengthen their political and fiscal autonomy in view of the expanded roles that they would have to perform as a result of their respective governments’ increased share in the proceeds from national taxes.
A three-term governor prior to his election as legislator, Villafuerte reminded candidates running for local posts that the landmark Mandanas-Garcia ruling of the Supreme Court will give local government units (LGUs) a bigger share in all national taxes collected by the government starting this 2022.
The former Camarines Sur governor said his measure will help LGUs become “more responsive and accountable” and will finally free them from the clutches of “Imperial Manila.”
Before the ruling, the LGUs’ Internal Revenue Allotment (IRA) came from 40% of national internal revenue taxes collected by the Bureau of Internal Revenue (BIR).
With the Mandanas-Garcia ruling stating that LGUs are entitled to a “just share” of all national taxes collected, it is projected that LGUs will have a 27.61%-increase in their total share of the IRA, now called the National Tax Allotment (NTA), according to the Department of the Interior and Local Government (DILG).
“Our LGUs should keep in mind that with more funding comes more responsibilities. The new crop of local executives in 2022 should prepare themselves for this transition,” Villafuerte said.
Department of Budget and Management (DBM) data show that LGUs are the biggest beneficiaries of the 2022 General Appropriations Act (GAA) of P5.24 trillion signed by President Duterte as they are to collectively get P959.04 billion in NTA share from the national budget—or about a third more than their 2021 IRA of P695.49 billion.
However, Villafuerte pointed out that the higher NTA will entail bigger responsibilities for local elective officials, given that the President had signed Executive Order (EO) No. 138 devolving more powers to LGUs in the implementation of local projects such as those on infrastructure, agriculture, healthcare and social welfare.
Villafuerte said that on top of this increased NTA beginning 2022, there is also a possibility that a proposal to further raise this share from the current 40% to 50% might still be passed by the Congress this year.
“Raising the IRA due LGUs will complement the Supreme Court’s move to boost LGUs’ fiscal autonomy via its landmark Mandanas-Garcia ruling.”
The former Camarines Sur governor said his measure will help LGUs become “more responsive and accountable” and will finally free them from the clutches of “Imperial Manila.”
He said that “raising the IRA due LGUs will complement the Supreme Court’s move to boost LGUs’ fiscal autonomy via its landmark Mandanas-Garcia ruling.”
The House of Representatives has already passed on third and final reading House Bill (HB) No. 10296, the consolidated bill that seeks to increase to 50% from 40% the LGU share of national taxes.
Villafuerte is one of the principal authors of the consolidated measure.
Aside from increasing the share of LGUs in the proceeds from national taxes, the bill also ensures that this would not be reduced substantially even with a ballooning public deficit and lower gross domestic product (GDP) growth, because this contains a provision that states that in no instance shall the President be allowed to reduce the NTA to less than 30 percent of the collection of taxes on the third fiscal year preceding the current fiscal year.
Moreover, even with this possibly reduced share, the measure also provides that during the first year of its effectivity, the LGUs, in addition to the 30%-share, shall also include the cost of devolved functions for essential services.
Instead, the bill provides that in cases when the national government incurs an unmanageable public sector deficit, the President, upon the recommendation of the Secretaries of Finance, of Interior and Local Government and of Budget and Management, will make the necessary adjustments to the LGU share, but upon consultation with the Congress.
