LGUs' income up 19.4% in Q1 as Mandanas ruling takes effect

Local government units (LGUs) have seen their operating income increase by 19.4% in the first quarter of 2022, resulting from the implementation of the Supreme Court (SC) ruling that increased their share in national tax collections, the Department of Finance (DOF) said Tuesday.

In a statement, the DOF said the total current operating income of LGUs—provinces, cities, and municipalities—rose to P319.42 billion, up 19.4% from the P267.55 billion reported in the same period of 2021.

Under the SC ruling, LGUs get a bigger share in the collections of national taxes, with the high court stating that their internal revenue allotment (IRA) should come from 40% of all national taxes collected by the Bureaus of Internal Revenue (BIR) and of Customs.

Under the old system, the IRA share of LGUs came only from the taxes collected by the BIR.

The implementation of the SC ruling started this year, with the IRA renamed as the National Tax Allotment (NTA).

For the first quarter of 2022, the DOF said the increase in the current operating income of LGUs, excluding the barangays, is mostly attributed to the NTA, which totaled P180.12 billion, or 31% more than the P137.55 billion they received for the same period last year.

Overall, when the barangays’ shares are included in the amount of P47.95 billion, the total NTA received by all LGUs during the period increased by 32%, from P172.33 billion in the first quarter of 2021 to P228.07 billion in the first quarter of 2022, it said.

The DOF said that financial reports of all local treasurers for the first quarter show that LGUs’ sources of revenues from external sources reached P184.45 billion, or 58% of their total current operating income, while the share of local sources, such as the collection of local taxes and fees, amounted to P134.97 billion, or 42%.

Meanwhile, the DOF said the Bureau of Local Government Finance (BLGF) requested in December 2021 the Department of the Interior and Local Government (DILG) to start engaging the barangays to report their financial statements to the BLGF, pursuant to Department of Budget and Management-DOF-DILG Joint Memorandum Circular (JMC) No. 2018-11 dated July 12, 2018, to capture the full fiscal position of all LGUs in the country, especially with the implementation of the Mandanas-Garcia ruling. —VBL, GMA News