August 17, 2022 | 12:08 am
The devolution plan was outlined in Executive Order 138, issued in June 2021 in response to the Supreme Court’s Mandanas ruling. The Court had ruled that LGUs are entitled to a 40% share of all “national taxes,” over-turning the National Government’s previous interpretation of the Code, which was that LGUs were entitled to a 40% cut of “internal revenue” — effectively, the Bureau of Internal Revenue’s collections only.
“LGUs… got a bonus or a windfall as a result of the ruling; they will get a lot of money this year. I think if my recollections correct, an additional hundred billion for this year. However, they will face some prob-lems next year because the formula is based on the collection three years prior, which means, because of the pandemic, collections were down,” Mr. Diokno said at the hearing.
In 2020, the government collected P2.86 trillion in revenue, down 8.97%, as the economy contracted by a record 9.6% due to the lockdowns associated with the pandemic. “Realistically, because you are giving LGUs more money, the problem pointed out by the World Bank, and I agree, is that many LGUs won’t be able to spend the money. It’s because of the lack of capacity. In fact, even before the crisis, local governments already had a surplus position. They usually have large surplus because they are not able to spend their money,” Mr. Diokno said.
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