Lower gov’t revenues to cut LGU allotments next year

Due to the drop in tax revenues collected by the government in 2020 at the onset of the COVID-19 pandemic, local governments’ share in the proposed 2023 national budget will be a lower P820.3 billion, the Department of Budget and Management (DBM) said on Thursday.

A June 15 local budget memorandum issued by DBM Officer in Charge Tina Rose Marie Canda said local government units’ (LGUs) share from all tax collections in 2020, which was the basis of their 2023 national tax allotment (NTA), included P665.8 billion from the Bureau of Internal Revenue’s (BIR) tax take two years ago; P154.4 billion from the Bureau of Customs’ collections of import duties and other taxes; plus P32.6 million in national taxes collected by other agencies.

When divided across LGUs levels, the country’s 82 provinces will have an NTA share of P188.7 billion, which they will divide among themselves; the 146 cities, also P188.7 billion; the 1,488 municipalities, P278.9 billion; plus P164.1 billion to be subdivided among the 41,935 barangays nationwide.

Next year’s NTA, formerly called internal revenue allotment, will be below the record P959.04 billion in this year’s P5.02-trillion national budget—the first annual appropriation that implemented the Supreme Court’s Mandanas-Garcia ruling. LGUs’ 2022 NTA was based on all tax collections in 2019.

The 2023 NTA will be smaller due to the tax collection decline in 2020—the year when the Philippine economy suffered from its worst postwar recession due to the most stringent COVID-19 lockdowns. Tax and nontax revenues in 2020 fell to P2.86 trillion from the historic high P3.14 trillion collected in 2019.