Metro Manila (CNN Philippines, September 5) — The government cannot implement the Supreme Court (SC) decision increasing the share of local government units from national revenues early out of fear that its implementation will create an “unmanageable fiscal deficit.”
“Due to the various commitments of the President to the people, such as the implementation of programs designed to combat criminality and corruption, as well as activities of the national government to promote human development and poverty reduction, to name a few, it was agreed that the adjustment of the IRA (internal revenue allotment) may not be feasibly effected during this Administration,” Presidential Spokesperson Salvador Panelo said in a statement on the Cabinet’s meeting on Wednesday.
Economic managers had previously warned that its implementation can push up the government’s fiscal deficit from three percent to four percent and leave a ₱195 billion fiscal impact.
Panelo said the government is holding back the implementation of the SC ruling until 2022. The high court has ruled that the adjustment of the IRA of local governments would start beginning 2022.
The SC ruled in 2018 that local governments are entitled to a 40 percent share of all government taxes, not just from the national internal revenue, as previously provided under the Local Government Code.
CNN Philippines’ Ina Andolong and Xave Gregorio contributed to this report.
