SC rules LGUs’ IRA funding includes BoC collections

THE SUPREME COURT (SC) has ruled that the local government unit (LGU) “just share” of the national government’s tax revenue should factor in Customs collections.

The Court, sitting en banc, issued the ruling in favor of a petition filed six years ago by Batangas governor Hermilando I. Mandanas, at the time a member of the House of Representatives for the province’s second district, which claimed that Internal Revenue Allotments (IRA), through which the national government funds LGUs, was short by about P500 billion from 1992 to 2012.

Voting 10-3 on Tuesday, the high court “interpreted the basis for the ‘just share’ of local government units… as being based on all national taxes and not only national internal revenue taxes,” according to a statement released by the SC Public Information on Wednesday.

Section 284 of Republic Act No. 7160, or the Local Government Code of 1991, states: “Local government units shall have a share in the national internal revenue taxes,” which are the taxes collected by the Bureau of Internal Revenue (BIR), according to the National Internal Revenue Code (NIRC) of 1997.

These include income tax, value-added tax, excise tax, and other taxes collected by the BIR.
National taxes were also ruled to include the remaining taxes collected by the government like those brought in by the Bureau of Customs (BoC), the LGUs’ share of which Mr. Mandanas alleged was not being forwarded.

LGUs, based on the Local Government Code, are entitled to 40% of national internal revenue taxes, but Mr. Mandanas claimed it should include taxes not collected by the BIR.

Mr. Mandanas was asked for comment but his office did not respond to calls.

Those who voted in favor of the decision were Acting Chief Justice Antonio T. Carpio, Associate Justices Teresita L. De Castro, Presbitero J. Velasco, Diosdado M. Peralta, Lucas P. Bersamin, Mariano C. Del Castillo, Estella M. Perlas-Bernabe, Noel G. Tijam, Samuel R. Martires, and Alexander G. Gesmundo.

Meanwhile, those who dissented were Associate Justices Mario Victor F. Leonen, Benjamin S. Caguioa, and Andres B. Reyes, Jr. Associate Justice Francis H. Jardeleza did not take part in the voting.

source : Busnessworld