Palace: SC ruling on IRA can bloat fiscal deficit

MANILA, Philippines — A Supreme Court (SC) ruling that would raise the budget allotted to local government units (LGUs) by 2022 could not be implemented early because it could bloat the country’s fiscal deficit, Malacañang said yesterday. 

Finance Secretary Carlos Dominguez III discussed the possible early implementation of the high court’s decision in the case of Mandanas vs. Ochoa during a Cabinet meeting on Wednesday, presidential spokesman Salvador Panelo said.

The 2018 ruling states that the “just share” of LGUs should be based on national taxes, not just on national internal revenue taxes. The SC has ruled that the new basis for computing the LGUs’ share of national government revenue would begin to take effect in 2022. 

League of Provinces of the Philippines (LCP) president and Marinduque Gov. Presbitero Velasco Jr. previously urged the Duterte administration to automatically release the LGUs’ share of the national taxes beginning July 1 this year and thereafter when the high court’s final decision had lapsed into finality.

Panelo said the new computation of Internal Revenue Allotment (IRA) for LGUs may not be implemented before 2022 because of the need to fund the President’s various programs. 

“Due to the various commitments of the President to the people, such as the implementation of programs designed to combat crime 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 may not be feasibly effected during this administration,” Panelo said. “Otherwise, there will be an unmanageable fiscal deficit, while securing loans will be more expensive to the nation as the citizenry will be paying for higher rates.”

Panelo noted that the postponement of the adjustment of the IRA of LGUs until 2022 is in accordance with the SC decision. Under the ruling, the expanded basis for calculating the share of LGUs in the national taxes will be prospectively effective starting from the 2022 budget cycle pursuant to the doctrine of operative fact. 

City mayors have urged President Duterte to release the share of LGUs in national taxes.

The LCP issued Executive Board Resolution 2019-05 asking the national government to immediately release the LGUs’ share of the IRA, which will allow them to perform their duties in the legislative agenda of the Duterte administration. 

They asked the President to order the Department of Budget and Management to compute and release the share of LGUs this year.

 “A deliberate delay in the implementation of the SC decision, regardless of any consideration, may run contrary to such constitutional mandate for fiscal decentralization,” the LCP said in a statement.

The LCP is composed of 145 members engaged in promoting the cities’ welfare in different policy issues of the national government.  – With Romina Cabrera