DBM: LGU tax share in 2023 falls to 820.3 billion pesos

DBM: LGU tax share in 2023 falls to 820.3 billion pesos

PHOTO: Official Journal

MANILA, Philippines—Due to a decline in tax revenue collected by the government in 2020 at the onset of the protracted COVID-19 pandemic, local governments’ share of the proposed national budget for 2023 will be less than $820.3 billion. pesos, according to the Ministry of Budget and Management (DBM) said Thursday, June 16.

A June 15 local budget memorandum issued by DBM official Tina Rose Marie Canda said that the local government units (LGUs) share of all tax collections in 2020, which was the basis for their national tax allocation (NTA) 2023, included P665 0.8 billion from the Bureau of Internal Revenue (BIR) tax two years ago; 154.4 billion pesos from the collection of import duties and other taxes by the Bureau of Customs (BOC); plus P32.6 million in national taxes collected by other agencies.

When distributed among the LGU levels, the country’s 82 provinces will have an NTA share of 188.7 billion pesos, which they will distribute among themselves; the 146 cities, also 188.7 billion pesos; the 1,488 municipalities, 278.9 billion pesos; plus 164.1 billion pesos to be distributed among the country’s 41,935 barangays.

Next year’s NTA, formerly known as Internal Revenue Allowance (IRA), will fall below the record 959.04 billion pesos in this year’s 5.02 trillion peso national budget – the first annual appropriation that has implemented the Supreme Court’s Mandanas-Garcia decision. LGU’s NTA 2022 was based on all tax collections in 2019, before the pandemic.

The 2023 NTA will be smaller due to lower tax collection in 2020 – the year the Philippine economy suffered its worst post-war recession due to the strictest COVID-19 lockdowns. Tax and non-tax revenue in 2020 fell to 2.86 trillion pesos from the all-time high of 3.14 trillion pesos collected in 2019.

But the NTA for next year will still be higher than the IRA of 695.5 billion pesos last year, as the High Court’s Mandanas-Garcia decision now takes LGU shares from the national budget of all domestic revenue taxes collected by BIR and BOC. In the past, LGU IRAs came only from BIR collections.
The new budget secretary, Amenah Pangandaman, said in an interview last week that the DBM under her leadership would take a hard look at how LGUs spend their largest share of the budget.

The DBM will monitor whether LGUs have spent – ​​or not – their NTAs, which, much like their IRAs in the past, they typically mix with other funds they receive from the national budget, Pandadaman had said. “LGUs have budget surpluses,” she noted.

Pangandaman had also said the new Marcos administration was considering a “slightly” larger 2023 national budget – its first full-year spending plan – than the record 5.268 trillion pesos set by President Rodrigo Duterte’s economic directors, but only if government coffers can afford it.

Canda had said that “for prudent fiscal management, we must stick to a budget of 5.268 trillion pesos for 2023”, although the DBM may still change items within the budget ceiling and the composition of the program of National Expenditure (NEP) may change depending on the spending priorities of the next administration.



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