‘A BIG POT’ | SC ruling on IRA not good for fiscal space – NEDA

7 months ago

MANDALUYONG, PHILIPPINES (July 12, 2018) – The Supreme Court (SC) ruling which increases the local government’s (LGU) share in state revenues may not be good for the country’s fiscal space, the National Economic and Development Authority (NEDA) said on Thursday.

In an interview with One News’ Agenda, NEDA Secretary Ernesto Pernia said President Rodrigo Duterte has the right to appeal the decision, which states that LGUs must receive share in all national government taxes, not just those collected by the Bureau of Internal Revenue (BIR).




“If you combine BIR revenues [to] Customs revenues then that’s quite a big pot. The [internal revenue allotment] will now become bigger… That’s not going to be good for our fiscal space, our revenue picture,” Pernia said.

SC based its decision on Section 6, Article X of the 1987 Constitution stating that LGUs must have a “just share, as determined by law, in the national taxes, which shall be automatically released to them.”

Under the Local Government Code of 1991, however, LGUs are to receive 40 percent of the total national internal revenue taxes only.



Budget Secretary Benjamin Diokno earlier warned of possible fiscal risk with the SC ruling, saying the national government will file a motion for reconsideration through the Office of the Solicitor General.

Diokno said the damage to the national government may cost from P1.2 trillion to P6 trillion, and may double the budget deficit to an equivalent of six percent of gross domestic product from a programmed three percent.