DOF raises problem over SC’s IRA ruling

Coordination among local government units (LGUs) and implementing agencies of national projects will be the main challenge once the Supreme Court (SC) ruling on Internal Revenue Allotment (IRA) is adopted, the Department of Finance (DOF) warned.

While Finance Secretary Carlos G. Dominguez III believes the high court ruling will not leave the national government to starve for funds, he warned that the decision may just let LGUs to bite off more than they can chew.

Dominguez explained the Supreme Court ruling involves “a lot of money” that LGUs need to spend to fund several social and hard projects, including infrastructure.

“We cannot just give them the money and say o ‘kayo na bahala diyan…’ hindi naman siguro pwede iyon diba? This is a lot of money,” Dominguez told reporters in an interview at the DOF headquarters.

As an example, he cited the Department of Agriculture’s farm-to-market road program where LGUs cannot construct roads based on their own respective plans.

Asked if the Supreme Court ruling will starve the national government for cash, Dominguez said “not really potentially starve it, but it will make it difficult. And again we have to make sure that the national projects like the roads are going to be coordinated.”

Earlier this month, the Supreme Court ruled that LGUs should have their share from all national revenue sources, not just from the national internal revenue taxes.

Dominguez said that the DOF has yet to receive the final Supreme Court decision, citing it is still unclear whether the ruling prescribes that its implementation is on a prospective or retroactive basis. If it is prospective, Dominguez said “we [will] sit down with the LGUs and work it out. What program you will implement? What are you going to do? What are you not going to do? We will see the proposal and then we have to ask the Cabinet and tell them how we will divide it.” But if the ruling is retroactive, the finance chief warned it becomes more problematic as it will involve trillions of pesos that the national government needs to pay back to the LGUs. “Our calculation is between R1 trillion to R1.5 trillion. That is our rough calculation [and] this is speculation… certainly we can’t afford a one time payment for sure, we cannot afford that,” Dominguez declared. “But the good thing about it is they’re [LGUs] open to national government paying up in installments [if the decision is retroactive],” he added. Dominguez, meanwhile, said that the executive department has not yet decided whether it will file a motion of reconsideration (MR) before the Supreme Court. “MR depends on what comes out. That’s certainly an option but we have to read it first, you cannot just say ‘let’s file immediately,’ but later on we learn this is something negotiable with the LGUs,” Dominguez said.