Higher IRA for LGUs won’t take effect before 2022

Presidential Spokesperson Salvador Panelo said it was agreed during the Cabinet meeting on Wednesday night that implementing higher IRA would lead to “unmanageable fiscal deficit.” (File Photo: Office of the Presidential Spokesperson/Facebook)

MANILA — Higher internal revenue allotment (IRA) for local government units (LGUs) may not be feasibly effected before 2022.

Under the Supreme Court’s decision in the case of Mandanas vs. Ochoa, the higher IRA for LGUs must be implemented.

Presidential Spokesperson Salvador Panelo said it was agreed during the Cabinet meeting on Wednesday night that implementing higher IRA would lead to “unmanageable fiscal deficit.”

“It was agreed that the adjustment of the IRA may not be feasibly effected during this Administration,” Panelo said in a statement.

“Otherwise, there will be an unmanageable fiscal deficit, while securing loans will be more expensive to the nation as the citizenry will be paying for higher rates,” he added.

Panelo said the IRA adjustment cannot be implemented due to various commitments, such as the implementation of programs designed to combat criminality and corruption, and activities of the national government to promote human development and poverty reduction, among others.

He, meanwhile, said postponing the adjustment of the IRA is in accordance with the ruling by the High Court that expanded basis for calculating LGUs’ share in the national taxes will be prospectively effective starting from the 2022 budget cycle.

Last April, the High Court rejected the government’s motion for reconsideration on the ruling on the IRA for LGUs.

The ruling stated that entitlement of LGUs to IRAs included not just internal revenue, but also all other government taxes.