CAGAYAN DE ORO, Philippines – The COVID-19 pandemic global health emergency may have ended, but its impact is far from over in Northern Mindanao, where local governments are now scrambling to look for more revenue sources to offset double-digit reductions in their tax shares from the national government

ocal governments in the region are receiving 15% less this year compared to the amount of National Tax Allotment (NTA) released to them by the Department of Budget and Management (DBM) in 2022.

Misamis Occidental Governor Henry Oaminal disclosed the reduced NTA in his second state-of-the-province address at the Seafront Arena in Oroquieta City on Saturday, July 1.

Oaminal’s announcement was based on Local Budget Memorandum No. 87, which the DBM released on June 9, indicating that the NTA for Misamis Occidental this year is about P1.552 billion.

This figure is 14.8% or roughly P271 million lower than the P1.823 billion which the province received in tranches in 2022.

Oaminal blamed the NTA reduction on the COVID-19 pandemic, which crippled economic activities throughout the country and affected government revenues starting in March 2020.

The DBM computed this year’s NTA based on tax collections three years ago.

“As we all know, most local government units, with the exception of highly urbanized cities like Manila, Cebu, Davao, and Cagayan de Oro, are NTA-dependent,” said the governor, urging all those present to “make our tourism vibrant for us to generate more revenues.”

This year’s reduced tax share is even more apparent in Cagayan de Oro City, with its share reduced by over P404 million from 2022’s P2.759 billion.

Cagayan de Oro Mayor Rolando Uy, backed by an ordinance, granted tax relief to delinquent real property and business taxpayers and offered incentives for early and advanced payments of tax obligations. Cagayan de Oro’s 2023 annual budget is over P7.5 billion.

So far, the City Treasurer’s Office has collected P576 million in tax delinquencies and advanced tax payments, aiming to generate about P5.41 billion from local revenues on top of its NTA.

Northern Mindanao’s NTA this year, as indicated in DBM Local Budget Memorandum No. 87, is P36.111 billion, which is 14.6% lower than 2022’s P42.307 billion or a difference of P6.2 billion.

Reductions in NTAs have also started to affect the provincial governments of Bukidnon, Camiguin, Lanao del Norte, and Misamis Oriental, as well as their cities, municipalities, and barangays.

Under Section 284 of the Local Government Code of 1991, local governments are entitled to a 40% share in the national internal revenue taxes based on the collection of the third fiscal year preceding the current fiscal year.

When the law was implemented, all local governments started receiving Internal Revenue Allotments (IRA) – now called NTA – from the DBM.

In its April 10, 2019 resolution in the case of “Congressman Hermilando I. Mandanas et al. vs. Executive Secretary Paquito N. Ochoa, Jr., et al.” (Mandanas-Garcia case), the Supreme Court en banc declared the phrase “internal revenue” unconstitutional.

The SC also ordered the secretaries of finance and budget and management, the commissioners of the Bureau of Internal Revenue and the Bureau of Customs, and the National Treasurer to include all collections of national taxes in the computation of the base for the just share of the local governments.

Starting in 2022, the phrase “National Tax Allotment” was used instead of “Internal Revenue Allotment” as a result of the ruling.

Based on certifications from collecting agencies, the DBM calculates and allocates the share of local governments using the formula under Section 285 of the Local Government Code.

The DBM then issues a local budget memorandum no later than June 15 of the current fiscal year to inform the local governments of their respective NTA shares. These NTA shares serve as the basis for the preparation of local government annual budgets. (Rappler.com)