Go for FAR (Part 2)

"We are optimistic that under President Duterte’s fiscal policy, the LGUs’ share in our national budget should increase for the localization and implementation of his Philippine Development Plan..."

In the 2018 National expenditure Program (NEP) submitted by President Duterte to Congress on the day of his 2nd SONA address, although the amount of the LGUs’ IRA went up by P 35.8 Billion (7.3%) from P 486.9B to  P 522.75B, its percentage share to the expenditure program decreased from 14.5% in 2017 to 13.9% in 2018. IRA accounts for 53% of the total funds automatically appropriated for 2018. 

Although the proposed Fund Augmentation Reforms (FAR) for LGUs can expect a minor setback for 2018, we are optimistic that under President Duterte’s fiscal policy, as a former Mayor himself, the LGUs’ share in our national budget should increase for the localization and implementation of his Philippine Development Plan (PDP) as well as in preparation for the transition to his proposed shift to a Federal form of government which he reiterated as one of his administration’s priorities in his 2nd SONA.

The Local Government Supprot Fund (LGSF) for 2018 went up from P39.8B to P51.3B thus raising the total ALGU from P560B to P601B, i.e. 15.95% of the total national proposed budget of P3.767 Trillion.  This, however, is slightly lower than the 16.7% share in 2017 and the 16.4% average for 1991-2017. 

But with the proposed ‘FAR’ strategies for the short-term, this minor setback will be more than compensated by the impending decision of the Supreme Court soon to be handed down on the Mandanas vs. Ochoa case (SC-GR No. 199802) filed on January 9, 2012 involving the non-inclusion of the national internal revenue collections of the Bureau of Customs on VAT and excise taxes on imported goods.  Batangas Gov. Hermilando Mandanas argued that these BOC collections should form part of the total NIRC base from which the LGUs’ 40% IRA share must be computed according to existing laws and must be automatically released to the LGUs as provided for in the 1987 Constitution.

Hopefully, this long-standing clamor of the Leagues will finally be resolved in favor of the LGUs.  It is estimated that the total IRA shortfall as a result of BIR’s non-inclusion of this BOC collections amounts to more than P800Billion covering the period 1992-2013, or an average of P62B/year uncollected IRA share of LGUs.


Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of TheLOBBYiST.
About the Author
Sandra Tablan Paredes is presently the Executive Director of the League of Provinces of the Philippines (LPP) since October, 2016 although she previously served LPP as Director from 1997 to 2004 Sandy helped organize ULAP in 1998 with former Governor Joey Lina and advocated for the LGUs' rightful IRA share, among other league advocacies, programs and projects to help local officials ensure local and fiscal autonomy and good governance. Recently served as concurrent interim Executive Director of ULAP from Jan-March 31, 2017. You can email her at This email address is being protected from spambots. You need JavaScript enabled to view it.
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