By Chino S. Leyco, July 31 2018; Manila Bulletin


Image Credit to Department of Budget and Management

The inter-agency Development Budget Coordination Committee (DBCC) will seek clarification from the Supreme Court whether local government units (LGUs) will have a share in revenues from economic zones.

Budget Secretary Benjamin E. Diokno said the Duterte administration’s economic team wanted to wait for the Supreme Court ruling on internal revenue allotment (IRA) to become final and executory before deciding on ways to comply with the order.

Diokno explained there are several provisions in the higher court ruling that need to be clarified first by the executive.

“We will wait for it to be final and executory which means we will file an MR [motion for reconsideration], so as now there will be no reallocation [in the 2019 proposed national budget],” Diokno told reporters after the DBCC meeting yesterday.

In particular, the budget chief cited that the executive wants to clarify if the order also covers the revenues generated by economic zones.

“There are taxes that are not covered right now, like the EPSA [Export Processing Zones Authority],” Diokno said, referring to Philippine Economic Zone Authority (PEZA). “We just want to clarify which is local, which is national.”

Diokno estimated that revenues from PEZA would amount around P40 billion.

Finance Secretary Carlos G. Dominguez III, meanwhile, supported Diokno’s plan to appeal the Supreme Court ruling.

“What we want to do is get a clarification on the law to see what it really means because there are really some questions that need to be clarified,” Dominguez told reporters. “One step at a time. That will be up to the lawyers and the secretary of the budget.”

For 2019, the finance chief said the executive has already earmarked P575 billion in internal revenue allotment for the LGUs.

Based on the Department of Finance (DOF) estimates, the national government’s fiscal gap could hit 4.0 percent of the economy, as measured by the country’s gross domestic product (GDP), if the LGUs will get additional budget allocation.

This is higher by 0.8 percentage point compared with the economic managers’ earlier assumption for next year of 3.2 percent.

Based on DOF calculations, the Supreme Court ruling, once final and executory, would bring the national government’s total expenditures to P3.911 trillion, a two percent increase compared with the original P3.832 trillion.

The finance department also estimated that the high court’s order entails P158.5 billion in additional spending requirement for the national government.

The Supreme Court earlier ruled that LGUs should get a share from all national revenues, including tariffs and duties collected by the Bureau of Customs.