LGUs to receive P10.1B share of ‘national wealth use’ in their areas

Provinces, cities, municipalities and barangays whose natural resources such as mineral deposits and energy supplies are being harnessed commercially stand to receive a combined P10.1 billion in additional development funding from the national government next year, Surigao del Sur Rep. Johnny Pimentel said on Sunday.

“The P10.1 billion covers the 40 percent share of local government units (LGUs) in the national treasury’s gross earnings from mining taxes, royalties from mineral reservations, forestry charges, and revenues from renewable power assets,” Pimentel said.

“The sharing is in accordance with the Local Government Code of 1991 and the Renewable Energy Law of 2008,” Pimentel, whose home province hosts nickel mining activities, said.

“The P10.1 billion is 80 percent higher than the P5.6 billion share of LGUs this year, and is provided for in the 2023 National Expenditure Program,” Pimentel said.

Pimentel attributed the huge increase in the national treasury’s income from the utilization of natural resources to elevated global metal prices and the doubling of the excise tax rate on minerals, mineral products, and quarry resources – from two percent to four percent – under the Tax Reform for Acceleration and Inclusion Law.

In a bid to boost government income, spur jobs creation, and hasten the country’s economic recovery from the COVID-19 pandemic, then President Rodrigo Duterte issued in April 2021 an executive order that lifted the nine-year freeze on the grant of new mining permits.

In December that year, the Department of Environment and Natural Resources also issued an administrative order that removed the four-year ban on open pit-mining for copper, gold, silver and complex ores.

Under the law, the LGU share from resource commercialization is distributed as follows: 20 percent to the host province; 45 percent to the host component city or the host municipality; and 35 percent to the host barangay.

In cases wherein the host is a highly urbanized or independent component city, 65 percent will go to the city and 35 percent to the barangay.

Under the law, once the LGUs receive their shares, they must appropriate the funds to finance local development and livelihood projects.

In the case of LGUs that obtain their shares from hydrothermal, geothermal and other energy assets, they must spend at least 80 percent of the money solely to lower the cost of electricity in the areas that supplied the resources.