MANILA – Local government units may get a lower Internal Revenue Allotment (IRA) share to provide the national government more funds for its projects, particularly infrastructure works.
The government cited the rising budget deficit and higher funding needs, particularly for the “Build, Build, Build” program, for the planned IRA share reduction.
“There is a provision in the Local Government Code that, in the event of an unmanageable public sector deficit, the President has the option to reduce the IRA from 40 percent to 30 percent, so we’ll use that,” Budget secretary Benjamin Diokno told the 2nd Economic Journalists Association of the Philippines Forum on Tuesday.
The government’s budget gap registered a 36-percent year-on-year rise as of July.
The budget deficit reached P279.4 billion by the end of July, higher than the P205 billion in the same period last year, Bureau of the Treasury data showed.
This happened despite the continued rise in government revenues since expenditures were rising as well.
By the end of the first seven months revenues rose 21 percent year-on-year to P1.652 trillion while spending ticked up 23 percent to P1.931 trillion.
Moreover, in the first half of the year, spending for infrastructure and other capital outlays alone rose 41.6 percent year-on-year to P352.7 billion, Department of Budget and Management data showed.
Disbursement for infrastructure projects in particular rose 4.3 percent year-on-year.
Under the “Build, Build, Build” program the administration plans to spend at least P8 trillion until 2022 to construct necessary infrastructure across the country.
But while the government commits to finance all its priority programs, it faces hurdles – including a Supreme Court ruling that expanded the source of the IRA to “all national taxes.”
Earlier Finance secretary Carlos Dominguez III said economic managers recommended the filing of a motion for reconsideration against the decision.
In a 42-page decision released in July, the Supreme Court ruled that the “just share” of local government units should be sourced from not just internal revenue collections but all national taxes.
Internal revenues are those collected by the Bureau of Internal Revenue, which gathers about 70 percent of state revenues. National taxes include those collected by the Bureau of Customs like tariffs.
Section 284 of the Local Government Code of 1991 (Republic Act 7160) states that local governments shall have a 40-percent share in the national internal revenue taxes.
Diokno earlier said the Supreme Court decision will have some implications on the proposed P3.757-trillion national budget for 2019 but assured that the Budget department will heed it once final. (With a report from Philippine News Agency/PN)
