DoF says SC ruling on LGU revenue share not final

THE Finance department will await a final decision from the Supreme Court on local government units’ (LGUs) “just share” of national government revenue before it makes a decision on filing a motion for reconsideration.

“Just heard the unverified rumor that the SC decision on the LGU’s share of taxes is still for editing and proofreading, then for signature of the justices,” Finance Secretary Carlos G. Dominguez III told reporters via mobile phone message when asked about the government’s plans after the ruling.

Although it has yet to provide a public copy of the resolution, the Supreme Court announced in a statement via its Public Information Office that the court, sitting en banc, voted 10-3 in favor of the LGU internal revenue allotment to include all national taxes, not just those collected by the Bureau of Internal Revenue.

The court ruled on a petition by former Batangas governor Hermilando I. Mandanas, who filed it six years ago, when he was a member of the House of Representatives for the province’s second district. The petition claims that the national government owes local governments about P500 billion between 1992 and 2012, based on an interpretation of the LGUs’ “just share” as stated in the Local Government Code.

Internal Revenue Allotments are LGUs’ main source of revenue. The Local Government Code requires that 40% of the national government’s internal revenue three years preceeding the current fiscal year, should automatically be earmarked to LGUs.

Each LGUs’ share is determined by its population and land area.

Apart from IRAs, LGUs have the authority to impose taxes to generate income, including real property tax, business tax, and other fees.

This year, the Department of Budget and Management has set aside P522.75 billion for IRAs, up 7.37%.

source:  Businessworld