A lawmaker called for a moratorium on the creation of new cities and provinces as it would dilute the impact of a Supreme Court (SC) ruling that gave them a bigger share of national tax collections.
Camarines Sur Representative LRay Villafuerte said the creation of new cities and provinces will merely cancel out the positive impact of the high court’s ruling on the financial viability of local government units (LGUs).
The veteran legislator was referring to the Mandanas, Garcia et al. v. Executive Secretary et al. case, wherein the SC held that all collections of national taxes, except those accruing to special-purpose funds and special allotments for the utilization and development of the national wealth, should be included in the computation of the base of the just share of the LGUs.
In the past, the LGUs’ internal revenue allotment (IRA) only came from national internal revenue collections by the Bureau of Internal Revenue (BIR).
“We don’t have to create new cities and provinces at this point because this will just dilute the impact of the high court’s ruling on the opportunities open for LGUs to build their independence from the national government,” the seasoned lawmaker said.
“Instead of creating new cities and provinces, it would be better to increase the capabilities of LGUs as more frontline functions and responsibilities will be devolved to them along with the increased national tax allotment.”
He said instead of creating new cities and provinces, it would be better to increase the capabilities of LGUs as more frontline functions and responsibilities will be devolved to them along with the increased national tax allotment (NTA).
Villafuerte also noted that President Rodrigo Duterte had signed Executive Order (EO) No. 138 devolving more powers to LGUs in the implementation of local projects, such as those on infrastructure, agriculture, healthcare, and social welfare.
“Instead, what should be done is to assist LGUs in strengthening their respective capabilities to provide not only basic services in their localities but in assuming a much wider set of responsibilities as many of the services provided by the national government will be devolved from hereon to the LGUs,” he said.
In a recent webinar organized by the Philippine Institute for Development Studies (PIDS) and the House of Representatives—Congressional Policy and Budget Research Department, League of Provinces of the Philippines (LPP) Executive Director Sandra Tablan-Paredes said creating new cities and provinces results in a smaller slice of the pie for all LGUs, many of which are dependent on their share of revenue generated by the national government.
Tablan-Paredes said there is a need to create a stringent set of criteria for promoting municipalities to cities and for municipalities to rise through the six classes based on income generated as it is expected that many LGUs would want to graduate to a higher tier to get a bigger share of the NTA pie.
Currently, the country has 81 provinces, 1,489 municipalities, and 105 cities.
According to Department of Budget and Management (DBM) data, LGUs are the biggest beneficiaries of the 2022 General Appropriations Act (GAA) of P5.24 trillion signed by Duterte as they are to collectively get PHP959.04 billion in NTA share from the national budget.
The House of Representatives has passed on the third and final reading House Bill No. 10296, seeking to intensify local government participation in national development by increasing the share of LGUs from national taxes.
The goal of the measure is to enable LGUs to provide better services and create more development projects.
It seeks to increase the local government’s share of national taxes from 40 percent to 50 percent based on the collection of the third fiscal year preceding the current fiscal year and thereafter.
Cagayan de Oro Representative Rufus Rodriguez, one of the authors of the bill, said the proposed amendments would provide more local funds for the implementation of COVID-19 response measures.
“At this time of a prolonged COVID-19 pandemic, our LGUs need more funds to take care of the health and economic needs of their constituents.”
“At this time of a prolonged COVID-19 (coronavirus disease 2019) pandemic, our LGUs need more funds to take care of the health and economic needs of their constituents. The resources of the LGUs are fast drying up because of this pandemic,” Rodriguez said.
The veteran legislator said the proposed law would reflect the recent ruling of the Supreme Court in the Mandanas case which “widened the base amounts” for computing the internal revenue allotment and can potentially allow LGUs to have more money for development purposes.