Senate minority leader Franklin Drilon said on Friday the government should seriously consider transferring the management of some agencies and services to local government units (LGUs) to cushion the impact of higher Internal Revenue Allotment (IRA) under the Mandanas ruling and the foregone revenues expected once the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) is enacted into law.
(Senate of the Philippines / FILE PHOTO / MANILA BULLETIN)
Drilon warned the higher requirement for IRA will take a toll on the national coffers on top of other losses that could arise from the proposed CREATE law.
“We should take the bull by its horn and we should be serious about which agencies or services should be devolved because we are facing a serious financial problem next year,” Drilon said during the Senate hearing on the budget of the Department of Interior and Local Government (DILG) and its attached agencies.
Drilon said he hopes the national government would heed his proposal for the government to turn over the management of the Bureau of Jail Management and Penology (BJMP) and the Bureau of Fire Protection (BFP) to LGUs.
“I hope our national leadership listens because we will be scrambling next year due to a very difficult financial crisis given the contraction of the economy and the expected low revenues due to the foregone revenues from the CREATE bill,” the minority leader said.
“If we don’t do anything about it, the national government may face an unmanageable deficit,” Drilon warned.
Due to the Mandanas ruling, he pointed out the IRA of LGUs will dramatically increase to P1.083-trillion by 2022. For 2021, the proposed IRA of LGUs stands at P695-billion.
The Supreme Court (SC) had earlier ruled that the IRA of the LGUs should come from 40 percent of collections of all national taxes and not just from national internal revenue taxes collected by the government. This also includes import duties and other levies imposed by the Bureau of Customs (BOC).
“Next year, at this time, we’ll be confronted with a P1.083-trillion allocation for the IRA for 2022 and I do not know what will happen with that kind of a burden on the national budget,” he said.
“In 2022, we will be downloading a huge sum of money to LGUs. Saan nila gagastusin iyong P1.1-trillion? (Where will they spend the P1.1-trillion?) This higher IRA should be met with more responsibilities through devolution of some basic services to LGUs,” he added.
Because of this, Drilon said agencies have no choice but to devolve their functions to LGUs. LGUs, he added, are in the best position to manage the jails and fire protection services particularly with the increase in their IRA by 2022.
"If you look at the situation on the ground, it is difficult to accept that the local government has no capacity to run fire departments," the senator said.
“There is no additional source of income to cover the increase in the IRA of LGUs. In fact, our revenue streams will be affected by CREATE and other legislation that we are doing today. There is no choice but to identify which agencies can be devolved in order that we can address this P1.083-trillion additional burden to the national government,” he said.