Despite calls for clarification, LGUs are set to receive 35% of the National Tax Allotment (NTA) in 2026, falling short of the 40% mandated by the Supreme Court. Finance Secretary Ralph Recto assures transparency and explains the discrepancy due to expiring provisions in tax reform laws.
Local government units (LGUs) are projected to receive approximately 35 percent of the National Tax Allotment (NTA) in 2026, which is 5 percent lower than the 40 percent mandated by the Supreme Court . Despite this discrepancy, Finance Secretary Ralph Recto emphasized during a media briefing on Thursday that LGUs are not being shortchanged. He highlighted the Department of Finance's commitment to transparency, stating that they provide detailed calculations to LGUs.
Recto explained that while the NTA share is currently around 32 percent in 2025, it is anticipated to rise to approximately 35 percent by 2026.Last week, the anti-corruption group Mayors for Good Governance (M4GG) and the League of Cities of the Philippines requested a dialogue with the Department of Finance to clarify the calculation of the 40 percent share of national taxes allocated to LGUs. They raised concerns about LGUs consistently receiving only 31 percent instead of the full 40 percent as defined in the Supreme Court's Mandanas-Garcia ruling. The ruling, which took effect in 2022, significantly expanded the NTA shares of LGUs to 40 percent of all national tax collections, excluding those managed by the Bureau of Internal Revenue.The dialogue held on January 15th aimed to address these concerns. Recto asserted that the computations accurately reflect the expiration of specific provisions under tax reform laws, particularly the Tax Reform for Acceleration and Inclusion Act, which designated certain revenues for a five-year period. He clarified that while these earmarked provisions expired, additional revenues would be redirected to LGUs. Recto emphasized that the computations were conducted based on the Supreme Court ruling, a Department of Justice opinion, and a Development Budget Coordination Committee resolution, and were finalized during the previous administration. The M4GG, represented by Baguio Mayor Benjamin Magalong, maintained that cities and municipalities have been receiving only 31 percent of their rightful share. The Mandanas-Garcia ruling granted LGUs greater fiscal autonomy by increasing their share of the national tax base, enabling them to fund local development projects and enhance service delivery
NATIONAL TAX ALLOTMENT Lgus SUPREME COURT FINANCE DEPARTMENT TAX REFORM
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