#NTAmaNa! Partial Implementation of SC Decision Considered (Part 3 of 3)

President Duterte is the LGUs’ only hope to resolve the issue on National Tax Allotment and we are fortunate that he was a former Mayor and he knows the plight of LGUs. This will be one of Duterte’s greatest legacies for the country. It will not bode well if he just passes this problem on to the next administration. 

Now that the “legal” issue has been resolved and the LGUs’ 40% NTA has been corrected by the Supreme Court (#NTAmaNa!), with the “fiscal” problem averted, and the options for the “political” decision are being considered by President Duterte, what then are the next steps to take? 

While Sec. 6, Article X of the 1987 Constitution provides that “LGUs shall have a just share, as determined by law, in the national taxes which shall be automatically released to them”, the determination of the National Tax Base (NTB) to be used as basis for the computation of the LGUs’ just share is still not automatic. NGAs that are duty-bound to submit to Congress their computation on the “automatic appropriations” in the budget, the BIR, DBM, BOC, DOF, and the Bureau of Treasury (BTR) have all been ordered by the Supreme Court to rightfully determine the LGUs’ 40% National Tax Allotment or NTA based on a “modified” Sec. 284 of the LGCode. Congress has the oversight power to call on these agencies to ensure that the right computation will be made this time in accordance to the Court’s ruling.

Hence, there should be a transparent determination of the National Tax Base (NTB), as ruled by the Court. How much is the NTA shortfall for July 1 to Dec. 31, 2019 and for 2020, based on all national taxes collected in 2016 and 2017, respectively? DOF Sec. Sonny Dominguez agreed to the Gov. Alvarez’ proposal to create a Technical Working Group (TWG) for this purpose to include representatives from LPP and the LGU leagues. 

What if the National Government shall opt to partially implement the decision? Logically, it should, at the very least, consider what the OSG had already conceded to or accepted in 2018 and implement it in the subsequent year, i.e. from June 10, 2019 – the date the decision had lapsed into finality. In the OSG’s Motion for Reconsideration, the Government did not contest nor question the inclusion of the BOC’s internal revenues from VAT, excise taxes and documentary stamp taxes collected on imported goods because Sec. 21 of R.A. 8424 already defined the composition of the “internal revenues”. Neither did the OSG question this in its recent Motion for Clarification where it merely asked to be clarified on the inclusion of the special funds and the BOC’s tariffs and duties which are national taxes. This is why Gov. Mandanas filed on Aug. 16, 2018 a Motion for Partial Implementation of the Court’s ruling on G.R. 199802 on Aug. 28, 2018. 

But in the FY 2020 NEP, IRA was still at status quo at P 649 Billion instead of P811 Billion. The 40% NTA of all national taxes, is at P887 Billion, or just a variance of P70 Billion. The internal revenues collected by BIR and BOC account for 92% of the LGUs’ 40% NTA while the remaining 8% is from both the LGUs’ share from the BOC’s tariffs and duties (3%) and the LGUs’ share from special funds (5%). Therefore, since only the 8% portion, or P 70 Billion of the NTA is still being clarified by the OSG with the Supreme Court, then it is logical to just set aside this P70B pending the Court’s reply to its motion for clarification.

So, why did DBM withhold the P162 Billion “uncontested” portion of the NTA when the National Government is merely seeking clarification on the date of implementation for the inclusion in the tax base only of the special funds and the BOC’s tariffs and duties? President Duterte is the LGUs’ only hope to resolve this issue and we are fortunate that he was a former Mayor and he knows the plight of LGUs. This will be one of Duterte’s greatest legacies for the country. It will not bode well if he just passes this problem on to the next administration. 

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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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