FINANCE Secretary Ralph G. Recto briefed local government units (LGUs) on how their National Tax Allotment (NTA) was computed, after a mayor alleged that the National Government (NG) is not handing over to LGUs their proper share of tax revenue.
In a statement, the Department of Finance (DoF) said Mr. Recto provided a “detailed line-by-line briefing” to mayors on the NTA computations, which it said were compliant with the 2019 Mandanas-Garcia Supreme Court ruling.
The 2019 ruling, which took effect in 2022, redefined the LGU share of national revenue, ordering that they be given 40% of all taxes, instead of the previous standard of 40% of all “internal revenue.”
The change was reflected in the renaming of the LGUs’ share to the national tax allotment. It had previously been known as the Internal Revenue Allotment (IRA).
Both the NTA and IRA are based on NG revenue from three years prior.
The ruling effectively amended the Local Government Code of 1991, which had originally based the LGU share on “internal revenue.”
“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,” Mr. Recto said.
Baguio City Mayor Benjamin B. Magalong had claimed that municipalities and cities have been “shortchanged,” receiving only 31.7% of national taxes instead of 40%.
“A comparison of the computations between the LGUs and the DoF was also discussed, revealing that the calculations and deductions under various laws were more or less aligned,” the DoF said.
Asked if the mayors were satisfied with the explanation, Quezon City Mayor Maria Josefina G. Belmonte-Alimurung said: “Yes, to a certain extent. There were a lot of misunderstandings and lack of communication.”
“I feel that all of our concerns were raised and all of them were answered. And the important thing is we have made a commitment to continue the dialogue between us and the DoF so that these issues pertaining to the NTA will continue to be resolved,” Ms. Belmonte told reporters.
Both Ms. Belmonte and the Finance Secretary said the differences stem from the treatment of special purpose funds.
“It was also explained to us that in the Supreme Court ruling there are so-called special purpose funds that are not included in the tax base,” she said.
“The SC ordered the Secretaries of Finance and Budget, the Commissioners of the BIR and the Bureau of Customs (BoC), and the National Treasury, to include all national tax collections in the computation of the NTA base, ‘except those accruing to special purpose funds and special allotments for the utilization and development of the national wealth.’” — Aubrey Rose A. Inosante