Tax share of LGUs to reach P959 billion in 2022


The Department of Budget and Management (DBM) said that the indicative national tax allotment (NTA) share of local government units (LGUs) will grow to more than P959 billion next year.


Budget Secretary Wendel Avisado said in a June 14 memorandum released on Tuesday that the total NTA share of local governments will be P959.04 billion, up P263.54 billion or 37.89 percent over this year’s figure.


The NTA would provide funding to a total of 43,649 local governments. Of the total, P220.57 billion would go to 82 provinces, P220.57 billion to 146 cities, P326.07 billion to 1,488 municipalities and P191.80 billion to 41,933 villages.


Under the Local Government Code of 1991, local governments are entitled to a 40 percent share of national internal revenue taxes earned in the third fiscal year prior to the current fiscal year. The NTA’s portion is likewise subject to Madanas-Garcia ruling, according to Avisado.


It should be noted that Gov. Hermilando Mandanas of Batangas was the lead petitioner in the Supreme Court’s ruling that local governments’ internal revenue allocation should be based on all national taxes, not only internal revenue taxes.


Meanwhile, Avisado said each local government must set aside at least 20 percent of its NTA share in its annual budget for development initiatives, a fund known as the 20 percent Development Fund.


He added, “local budget plans and goals shall, as far as practicable, be harmonized with national development plans, goals, and strategies to optimize the utilization of resources and to avoid duplication in the use of fiscal and physical resources.”


Because the conclusion of the coronavirus disease 2019 (Covid-19) pandemic is uncertain, local governments should continue to fund Covid-19-related programs, projects, and activities and expenses as needed.


Going forward, he said, local governments should take into account NTA’s expected downward trend in the coming years, particularly in 2023-2024, given the government’s lower revenue collections in 2020 and possibly 2021 as a result of the pandemic’s continued imposition of community quarantines and restrictions on the general public’s mobility.


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