Senate Minority Leader Franklin Drilon on Friday warned an increase in the internal revenue allotment of LGUs by 2022 would take a toll on the national coffers on top of other losses arising from the proposed Corporate Recovery and Tax Incentives for Enterprises Act or CREATE.
The government should seriously look at the agencies and services that should be devolved to the LGUs.
“We should take the bull by its horn and we should be serious about which agencies or services should be devolved because we are facing a serious financial problem next year,” Drilon said.
“I hope our national leadership listens because we will be scrambling next year for a very difficult financial crisis given the contraction of the economy and the expected low revenues due to the foregone revenues from the CREATE bill.
“If we don’t do anything about it, the national government may face an unmanageable deficit.”
Due to the Mandanas ruling, the IRA of the LGUs will dramatically increase to P1.083 trillion by 2022. For 2021, the proposed IRA of LGUs is P695 billion, Drilon said.
The Supreme Court had ruled that the IRA of the LGUs must come from 40 percent of the collections of “all” national taxes—including collections from import duties and other levies by the Bureau of Customs—and not just from national internal revenue taxes collected by the Bureau of Internal Revenue.
“Next year, at this time, we’ll be confronted by a P1.083-trillion allocation for the IRA for 2022, and I do not know what will happen with that kind of a burden on the national budget,” Drilon said.
“In 2022, we will be downloading a huge sum of money to the LGUs. Where will they spend that P1.1 trillion? This higher IRA should be met with more responsibilities through the devolution of some basic services to the LGUs,” said Drilon, adding that the agencies had no choice but to devolve their functions to the LGUs.
He said 2021 could be difficult for the country insofar as revenue streams were concerned given the contraction of the economy and the expected revenue losses due to the CREATE bill and other legislation.
Senator Francis Pangilinan said the CREATE measure should attract big-ticket investments in the agro-industries.
“This new CREATE measure should be able to support and promote more investments in farming, fishing and other related industries. There are many opportunities here,” Pangilinan said, noting that only the agriculture sector grew during the pandemic.
“The market price of a liter of coco water ice is around a dollar. So that’s already P3 billion dollars that is being thrown away,” Pangilinan said.
He cited other coconut-based products that are being thrown away because the farmers do not have access to proper technology to produce and package them for distribution.
“We want both technology and investments to come in immediately so that we can bring value-adding to the coconut industry and not just rely on the copra, which is really at the bottom of the value-adding ladder,” he said.