Recto Eases LGU Concerns Over Tax Allotment Shares

Finance Secretary Ralph G. Recto addressed concerns about the computation of National Tax Allotment (NTA) shares for local government units (LGUs) during a dialogue with city mayors on January 15, 2025.

Recto provided a detailed, line-by-line explanation of the NTA computations, ensuring compliance with the 2019 Mandanas-Garcia Supreme Court ruling and other applicable laws. Key participants in the meeting included Baguio City Mayor Benjamin Magalong, Quezon City Mayor Joy Belmonte, and Dumaguete City Mayor Felipe Antonio Remollo.

“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.

The dialogue also included a comparison of NTA computations between LGUs and the Department of Finance (DOF), showing that the calculations and deductions under various laws were mostly aligned.

The city mayors expressed appreciation for the DOF’s openness and willingness to address their concerns. Mayor Magalong, in particular, apologized to Recto for earlier remarks suggesting that LGUs were being shortchanged in their NTAs.

In response, Recto assured the mayors of the DOF’s readiness to maintain an open line of communication to strengthen LGU fiscal capacities. He emphasized the importance of optimizing resources to deliver better services to Filipinos.

The 2019 Mandanas-Garcia ruling, which took effect in 2022, increased LGU NTA shares to 40% of all national taxes, including those collected beyond the Bureau of Internal Revenue (BIR). This change aimed to enhance LGU fiscal autonomy by expanding their share of the national tax base.

The Supreme Court ordered the inclusion of all national tax collections in the NTA base calculation, except those allocated to special purpose funds and national wealth development projects. It also required compliance with relevant provisions of the 1987 Constitution, including Section 29 (3), Article VI and Section 7, Article X.

Recto underscored that the DOF followed the Supreme Court ruling and consulted LGUs in formulating the NTA computations.

“We want to be clear and transparent with LGUs. Our goal is to help them maximize their resources while following the law,” he said.

He was joined by key DOF officials, including Chief of Staff Maria Luwalhati Dorotan Tiuseco, Undersecretaries Charlito Mendoza and Bayani Agabin, Assistant Secretaries Karlo Adriano, Allan Quebral, and Danielle Culangen, as well as representatives from the Bureau of Local Government Finance (BLGF), Bureau of the Treasury (BTr), BIR, and Bureau of Customs (BOC).

Recto emphasized the importance of sustained dialogue between the DOF and LGUs to ensure alignment in implementing the Mandanas-Garcia ruling. He encouraged LGUs to focus on efficient fiscal management and resource optimization to deliver quality public services.

“We are always ready to engage with LGUs to address their concerns and provide guidance on strengthening their financial standing,” Recto said.