Recto, city mayors resolve LGU tax share concern
Finance Secretary Ralph Recto said he has resolved the concerns on the computation of the tax share of local government units (LGUs) in a “productive dialogue” with city mayors.
“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,” Recto said in a statement.
Present during the briefing on Wednesday were Baguio City Mayor Benjamin Magalong, Quezon City Mayor Joy Belmonte and Dumaguete City Mayor Felipe Antonio Remollo.
Recto said the city mayors had expressed their gratitude to the Department of Finance (DOF) for the dialogue and its “openness to listening and addressing concerns.”
The meeting took place after the anticorruption movement Mayors for Good Governance (M4GG) had asked the DOF for a full accounting of the share of LGUs from national taxes.
Citing the computations of M4GG, Magalong, a founder of the group, said the amounts that LGUs had been receiving were short of what was mandated by the Supreme Court decision.
He was referring to the high court’s ruling back in 2018 that significantly increased the tax base on which the share of LGUs is computed, thus supporting fiscal decentralization in the government.
That decision, which took effect in 2022, expanded the base from which the national tax allotment (NTA) share of LGUs is computed to consist of revenues generated not just by the Bureau of Internal Revenue (BIR) but also receipts of the Bureau of Customs and other collecting agencies.
Demand for ‘just share’
The DOF earlier said that while it had been compelled by the high tribunal to include all national tax collections in the computation of the NTA base, that same ruling exempted those revenues dedicated to special purpose funds and special allotments for the use and development of government resources.
Under the 2025 national budget, LGUs will receive NTA of P1.03 trillion.
Before the Supreme Court decision, LGUs got their share only from revenues of the BIR, prompting local officials led by Batangas Gov. Hermilando Mandanas and former Bataan Gov. Enrique Garcia to sue the national government in 2013 and demand for “just shares” of LGUs.
But Magalong claimed that municipalities were receiving NTA share of only 31 percent, instead of the 40 percent ordered by the Supreme Court.
In an interview with reporters on Wednesday, Belmonte said the period covered by the dispute was 2023 to 2024, adding that the mayors were satisfied by the DOF’s explanation “to a certain extent.”
“There were a lot of misunderstandings and lack of communication. But the DOF is very transparent. I’d like to stress that. And a lot of the things that we were wondering about were answered,” Belmonte said.
