Executive department to file MR versus SC’s ruling on IRA

The Duterte administration will challenge anew the recent Supreme Court’s (SC) ruling on national revenue taxes collected by the national government, the Department of Budget and Management (DBM) said yesterday.

In a briefing, Budget Secretary Benjamin E. Diokno said that the executive department will file a motion for reconsideration against SC’s decision allowing local government units (LGUs) to get higher share from all national taxes.

Diokno said that the high court’s ruling, if finalized, will obligate the national government to provide at least 1160 billion in additional internal revenue allotment (IRA) for LGUs.

But despite the higher allotment for LGUs, Diokno said that the Duterte administration’s ambitious infrastructure program and the government’s investment rate ratings will not be affected by the order.

He explained the administration will just realign some of its funding for infrastructure for LGUs’ implementation.

The budget chief, meanwhile, lauded the SC’s decision to have its implementation prospectively, not retroactively.

Based on initial estimates of the DBM and Department of Finance (DOF), the SC’s ruling will require around 11 trillion to 11.5 trillion should the order is implemented retroactively.

Earlier, the Supreme Court ordered the automatic release “without need of further action of the just shares of the LGUs in the national taxes through their respective provincial, city, municipal or barangay treasurers on a quarterly basis but not beyond five days from end of each quarter.”

This directive was contained in the decision which ruled that the “just share” of LGUs should be “based on all national taxes and not only on national internal revenue taxes.”

Covered by the SC directive are the DOF, DBM, the National Treasurer, the Bureau of Internal Revenue (BIR) and the Bureau of Customs.

But the SC said the decision is prospective in application which means that the LGUs’ prayer for the payment of arrears in their “just share” in national taxes was dismissed.

The SC decision included six more tax sources for the LGUs.

These are the tariff and customs duties collected by the BOC, value-added taxes and all national taxes collected in the Autonomous Region in Muslim Mindanao, national taxes collected from mining, excise taxes collected from tobacco products, national taxes collected under Section 283 of National Internal Revenue Code and franchise taxes under Republic Act 6631 and 6632 (Horse Racing Laws).

The decision meant the LGUs would receive bigger IRAs from the national budget.