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DOF addresses LGUs’ concerns over tax share computations

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The Department of Finance addressed the concerns raised by city mayors about the National Tax Allotment (NTA) share computations.

Finance Secretary Ralph Recto in a dialogue with a group of mayors on Jan. 15, 2025, provided a detailed explanation of the NTA calculations, ensuring compliance with the 2019 Mandanas-Garcia Supreme Court ruling and relevant legislation.

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“We did not change or amend anything. This is based on the Supreme Court ruling and a Development Budget Coordination Committee resolution, which was made in consultation with the LGUs. We are very transparent,” Recto said.

A comparison of the computations between the LGUs and the DOF was also discussed, revealing that the calculations and deductions under various laws were more or less aligned.

The city mayors expressed their gratitude to the DOF for the dialogue and its openness to listening and addressing concerns.

Baguio City Mayor Magalong, in particular, expressed his apologies to Secretary Recto for his earlier remarks suggesting that LGUs were being shortchanged in their NTAs.

Recto assured the mayors that he is just ‘one call away’ and that the DOF is always open to having continued dialogues with LGUs to help them strengthen their fiscal capacities and optimize resource utilization to deliver more and better services to Filipinos.

The 2019 Mandanas-Garcia ruling of the Supreme Court (SC), which took effect in 2022, increased the NTA shares of LGUs to 40 percent of all national taxes beyond those collected by the Bureau of Internal Revenue (BIR).

The adjustment was intended to enhance the fiscal autonomy of LGUs by granting them a more substantial share of the national tax base.

The SC, in its decision, ordered the Secretary of the DOF, the Secretary of the Department of Budget and Management (DBM), the commissioners of the BIR and the Bureau of Customs (BOC) and the National Treasury, to include all national tax collections in the computation of the NTA base, “except those accruing to special purpose funds and special allotments for the utilization and development of the national wealth.”

The DOT said that in determining the deductions, it is guided by the SC decision including Section 29 (3), Article VI and Section 7, Article X of the 1987 Constitution.

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