The operating income of local government units (LGUs) went up 19.4 percent to P319.42 billion in the first quarter from P267.55 billion in 2021 on higher national tax allotments.
LGUs such as provinces, cities, and municipalities benefited from the Supreme Court (SC) ruling that increased their share in national tax collections, according to the Department of Finance (DOF).
Based on the Bureau of Local Government Finance (BLGF) preliminary data, LGU sources of revenues from external sources amounted to P184.45 billion during the period. This was 58 percent of their total current operating income.
Meanwhile, the share of local sources such as the collection of local taxes and fees, accounted for 42 percent or P134.97 billion.
The DOF said that under the SC ruling, LGUs “get a bigger share in the collections of national taxes, with the high court stating that their internal revenue allotment (IRA) should come from 40 percent of all national taxes collected by the Bureaus of Internal Revenue (BIR) and of Customs.”
“Under the old system, the IRA share of LGUs came only from the taxes collected by the BIR,” the DOF explained, adding that the implementation of the SC ruling started this year, with the IRA renamed as the National Tax Allotment (NTA).
“Thus, for the first quarter of 2022, the increase in the current operating income of LGUs, excluding the barangays, is mostly attributed to the NTA, which totaled P180.12 billion or 31-percent more than the P137.55 billion they received for the same period last year,” said BLGF Executive Director Niño Raymond Alvina in his report to Finance Secretary Carlos Dominguez III.
Including barangays’ shares, the total NTA received by all LGUs during the period increased by 32 percent to P228.07 billion versus P172.33 billion same period in 2021.
Alvina also said that LGU revenue generation has recovered in the first quarter with locally sourced revenues amounting to P134.97 billion, up 8.6 percent from P124.27 billion same period last year.
For the full year 2021, the total current operating income of LGUs amounted to P871.3 billion, which was 4.48 percent higher than the P833.92 billion reported in 2020.
The increase came from the higher IRA which accounted for P554.02 billion of the current operating income of LGUs. This was 7.35 percent higher than 2020’s P516.07 billion, said the DOF.
As of 2021, Alvina reported to the DOF that the amount of available LGU funds left for operations was P263.12 billion. This amount “represents the estimated free cash of LGUs after deducting prior year accounts payables, obligations not yet due and demandable, and obligations for projects charged to continuing appropriations,” said the DOF.
The DOF also noted that cities have the biggest available funds at P102.27 billion, followed by municipalities with P97.82 billion and provinces with P63.13 billion.