The Department of Finance (DOF) projects that local government units (LGUs) will receive approximately 35 percent of the national tax allotment (NTA) by 2026. While this represents an increase from the current 32 percent, it falls short of the 40 percent mandated by law. This development has sparked concerns among local officials, particularly regarding deductions from the NTA share and the impact on municipalities.
The shares of local government units (LGUs) in the national tax allotment (NTA) are projected to reach approximately 35 percent by 2026, according to the Department of Finance (DOF). Finance Secretary Ralph G. Recto revealed this during a press conference on Thursday, stating that LGUs will experience an increase in revenue next year as the Tax Reform for Acceleration and Inclusion (TRAIN) Law is set to expire in 2025.
While LGUs will see a rise in their NTA shares next year, moving from the 32 percent they receive this year, it will still fall short of the 40-percent allotment mandated by the law. Recto emphasized that earmarked funds, such as special purpose funds and special allotments designated for the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM), are excluded from the NTA share calculation. The 2019 Mandanas-Garcia ruling of the Supreme Court, which came into effect in 2022, increased the NTA shares of LGUs to 40 percent of all national taxes collected beyond those managed by the Bureau of Internal Revenue (BIR).Quezon City Mayor and League of Cities President Joy Belmonte expressed concerns about a lack of understanding and communication among government officials regarding NTA shares in a separate interview. She acknowledged that the DOF, through Recto, addressed these concerns during a dialogue with city mayors on January 15. Despite this, Belmonte stated that the League of Cities will continue to explore other legal remedies and interpretations of the Constitution to ensure LGUs receive their rightful share. Belmonte highlighted that municipalities, particularly those classified as fourth- and fifth-class, are disproportionately affected by the deducted NTA shares. She urged the League of Municipalities to actively participate in the discussion, emphasizing their reliance on NTA funds. This issue encompasses 43,634 LGUs nationwide, including provinces, cities, municipalities, and barangays. Notably, 149 cities and 1,491 municipalities were allocated P239.045 billion and P350.678 billion, respectively, in their total NTA shares
LOCAL GOVERNMENTS NATIONAL TAX ALLOTMENT FINANCE DEPARTMENT LEGAL CHALLENGES MANDAAS- GARCIA RULING
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