MANILA — Local government units are unlikely to benefit from a Supreme Court ruling that adjusted the computation of revenue shares to include all national taxes until 2022, Malacañang said Thursday.
This after President Rodrigo Duterte and his top officials agreed during a Cabinet meeting Wednesday night not to implement until 2022 a high court decision declaring that LGUs are entitled to revenue allotments on the basis of all national taxes, his spokesperson Salvador Panelo said.
Panelo explained that the decision could not be implemented immediately due to the various ongoing programs of the government.
“Due to the various commitments of the President to the people, such as the implementation of programs designed to combat criminality and corruption, as well as activities of the national government to promote human development and poverty reduction, to name a few, it was agreed that the adjustment of the IRA (internal revenue allotment) may not be feasibly effected during this administration,” he said in a statement.
League of Provinces of the Philippines (LPP) and Marinduque Gov. Presbitero Velasco Jr. earlier called on the national government to implement by July 1 the top court’s ruling.
“It would be for everyone’s best interest if the national government will no longer delay its implementation by FY (fiscal year) 2022, as suggested by your economic team,” Velasco told Duterte.
The top court had declared unconstitutional and deleted the phrase “internal revenue” in sections of the Local Government Code, because under the Constitution, LGUs are entitled to other national taxes, such as collections by the Bureau of Customs.
Implementing the ruling before 2022 will result in an “unmanageable fiscal deficit” and make it more difficult for the Philippines to secure loans, Panelo said.
“In any event, this postponement until fiscal year 2022 of the adjustment of the IRA of local government units is in accordance with the ruling by the High Court that the expanded basis for calculating the share of local government units in the national taxes will be prospectively effective starting from the 2022 budget cycle pursuant to the doctrine of operative fact,” Panelo said.