LGUs ought to have 50 percent share in national taxes 

Published January 19, 2021, 12:55 AM

by Former Senator Atty. Joey D. Lina


Former Senator
Atty. Joey Lina

In my Teleradyo program Sagot Ko ‘Yan last Sunday, I had an interesting discussion with Marinduque Governor Presbitero Velasco Jr., national chairman of the Union of Local Authorities of the Philippines (ULAP), and he shared some remarkable revelations of great impact to local government units.

First, plans are in the offing to launch a People’s Initiative seeking to amend the 1985 Constitution that would give LGUs an additional 10 percent, or “a share of at least 50 percent in the national taxes automatically released” instead of the current share of 40 percent as specified in RA 7160 or the Local Government Code of 1991.

Secondly, according to Gov. Velasco who is also national president  of the League of Provinces of the Philippines (LPP), a Malacanang executive order is forthcoming to give billions of pesos more to LGUs in light of a landmark Supreme Court ruling in 2018, and to finally make devolution of powers and functions a reality – more than 28 years since RA 7160 was enacted to promote genuine and meaningful local autonomy as mandated in the Constitution.

The SC had ordered, in a July 2018 decision which become final and executory  in April 2019, the inclusion of “all collections of national taxes in the computation of the base of the just share of the Local Government Units according to the ratio provided in the now-modified Section 284 of Republic Act No. 7160, except those accruing to special purpose funds and special allotments for the utilization and development of the national wealth.”

In effect, the High Court ruling entitles the country’s provinces, cities, municipalities, and barangays to more funds, representing National Tax Allotment (NTA) shortfalls due LGUs and covering fiscal years 2019 through 2022. Instead of “IRA” or Internal Revenue Allotment, “NTA” is now the new term used, after the SC declared unconstitutional the phrase “internal revenue” in RA7160 and ordered the phrase deleted from its Section 284.

Having been Laguna governor and president of both LPP and ULAP myself, I certainly understand the plight of LGUs. Despite the 1987 Constitution provision (Art. 10, Sec. 6) unequivocally mandating in favor of LGUs a “just share, as determined by law, in the national taxes which shall be automatically released to them,” they faced extreme difficulties getting what’s due them.

It would take a Supreme Court decision – that all national taxes should include customs duties, tariffs, fees, etc., and not just those imposed by the National Internal Revenue Code – to pave the way for LGUs to finally get in full their “just share” that they have been deprived of throughout the years.

And, in the past, the constitutional provision “automatically released” had to go through a lot of haggling for it to be realized. I remember in the late 1990s, we had to plead with Malacañang for the share of LGUs to be automatically released. We were fortunate that then President Joseph Estrada had a soft heart for LGUs, having been a mayor himself.

But the “just share” provision in the Constitution raises a crucial question: Is it really just? With all the functions and powers to be devolved from the national government to LGUs, 40 percent of national taxes is certainly not enough, especially for LGUs experiencing extreme financial difficulties particularly in these times when coping with the pandemic and making COVID-19 vaccines available can be very challenging.

Thus, the news of a People’s Initiative to increase the share of LGUs is a welcome development. It is provided in the Constitution, with RA 6735 as its implementing law, and is in line with the Constitutional principle that “sovereignty resides in the people and all government authority emanates from them.”

Gov. Velasco said local officials are hoping that the efforts of private individuals to push for the People’s Initiative, would succeed in gathering 7.6 million signatures by the middle of this year. Section 5(b) of RA 6735 states: “A petition for an initiative on the 1987 Constitution must have at least twelve per centum (12%) of the total number of registered voters as signatories, of which every legislative district must be represented by at least three per centum (3%) of the registered voters therein.”

Effective leadership and a good management system are essential to good governance whereby local officials are at the forefront and constantly aware of the situation on the ground and what socio-economic programs and projects are exactly needed in specific localities. Decentralization of executive and legislative powers to provincial, city, municipal and barangay governments certainly jibe well with the development agenda of agricultural modernization, rapid industrialization and employment creation to bring economic progress to various localities.

Thus, decentralization and devolution are indeed indispensable if we are to achieve genuine and meaningful local autonomy to bring about economic progress in the countryside. But along with devolution of functions and powers, devolution of much-needed funds to LGUs is of equal importance. And increasing the share of LGUs to at least 50 percent of all national taxes will certainly go a long way towards a prosperous Philippines.

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