MANILA — The Department of the Interior and Local Government (DILG) on Thursday welcomed the Supreme Court’s (SC) final ruling, which declared that local government units (LGUs) are entitled to internal revenue allotment (IRA) based on the collections of all national taxes and not just from national internal revenue taxes.
“We are pleased with the decision of the SC since it gives life to the Constitutional mandate that LGUs must be given a just share in national revenues. By affirming its ruling that the source of IRA should come from all national taxes, the delivery of basic services will improve impacting directly on the lives of our countrymen,” DILG Undersecretary and spokesperson Jonathan E. Malaya said in a statement.
Malaya said that while the DILG has yet to read the court’s decision, “we are glad because implementing this decision will allow LGUs to improve its services particularly on anti-poverty and peace and order.”
“We urge LGUs to utilize these additional funds well and we in the DILG commit ourselves to monitor closely the use of these funds to ensure that they contribute to national development goals and objectives,” he noted.
The DILG spokesperson also said that the bigger IRA share of LGUs in the coming years will prove to be useful in bringing the services of the government down to the grassroots level and to the farthest sitios and barangays of the country.
“With bigger funds come more quality essential services for our people, most especially the poor,” he said.
LGUs, however, will start receiving their bigger IRA starting with the 2022 budget cycle after the SC denied a motion to award to the LGUs all arrears resulting from the application of the expanded basis in computing the IRAs.
In an 8-3 vote on Wednesday, the SC affirmed its earlier decision in expanding the basis of the IRA of LGUs based on the petition of former Batangas Representative and now Governor Hermilando Mandanas.
The SC held that the IRA of LGUs under the Local Government Code (Republic Act 7160) is understood to be based on the collections of all national taxes, as expressly stated in Section 6 of the Constitution.
National taxes include customs tariffs and taxes collected by other state agencies such as the Bureau of Immigration.
Internal revenue taxes, meanwhile, refer to taxes imposed by the BIR, such as income taxes, estate and donor’s taxes, value-added tax, excise taxes, and documentary stamp taxes. (PR)