DBM: LGUs’ 2023 tax share declines to P820.3 billion

PHOTO: Official Gazette

MANILA, Philippines—Due to a drop in tax revenues collected by the government in 2020 at the onset of the prolonged COVID-19 pandemic, local governments’ share in the proposed 2023 national budget will be a lower P820.3 billion, the Department of Budget and Management (DBM) said on Thursday (June 16).

A June 15 local budget memorandum issued by DBM Officer-in-Charge Tina Rose Marie Canda said local government units’ (LGUs) share from all tax collections in 2020, which was the basis of their 2023 national tax allotment (NTA), included P665.8 billion from the Bureau of Internal Revenue’s (BIR) tax take two years ago; P154.4 billion from the Bureau of Customs’ (BOC) collections of import duties and other taxes; plus P32.6 million in national taxes collected by other agencies.

When divided across LGUs levels, the country’s 82 provinces will have an NTA share of P188.7 billion, which they will divide among themselves; the 146 cities, also P188.7 billion; the 1,488 municipalities, P278.9 billion; plus P164.1 billion to be divided among the 41,935 barangays nationwide.

Next year’s NTA, formerly called internal revenue allotment (IRA), will be below the record P959.04 billion in this year’s P5.02-trillion national budget — the first annual appropriation that implemented the Supreme Court’s Mandanas-Garcia ruling. LGUs’ 2022 NTA was based on all tax collections in 2019, pre-pandemic.

The 2023 NTA will be smaller due to tax-collection decline in 2020 — the year when the Philippine economy suffered from its worst post-war recession due to the most stringent COVID-19 lockdowns. Tax and non-tax revenues in 2020 fell to P2.86 trillion from the historic-high P3.14 trillion collected in 2019.

But the NTA for next year will still be higher than the P695.5-billion IRA last year, as the High Court’s Mandanas-Garcia decision now draws LGU shares in the national budget from all internal revenue taxes collected by the BIR and the BOC. In the past, LGUs’ IRA came only from BIR collections.
Incoming budget secretary Amenah Pangandaman said in an interview last week that the DBM under her watch will look closely into how LGUs were spending their bigger budget share.

The DBM will monitor if LGUs have been spending — or not — their NTAs, which, just like their IRA in the past, they usually mix with other funds they get from the national budget, Pandandaman had said. “LGUs have budget surpluses,” she had noted.

Pangandaman had also said that the incoming Marcos administration was looking at a “slightly” larger 2023 national budget — its first full-year spending plan — than the record P5.268 trillion set by President Rodrigo Duterte’s economic managers, but only if government coffers can afford it.

Canda had said that “for prudent fiscal management, we have to stick to a P5.268-trillion budget for 2023,” although the DBM may still tweak items within the budget cap and the national expenditure program’s (NEP) composition could change depending on the next administration’s spending priorities.

TSB

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