Gov’t should settle IRA issues first before talking federalism — Recto

Senator Ralph Recto said if the government wants to strengthen local and regional governments through federalism, it can show its sincerity by complying with the Supreme Court (SC) decision on raising the Internal Revenue Allotment (IRA).

“The administration is being presented with the opportunity to put its money where its mouth is, in a case that will prove federalism’s model of granting the regions more money is feasible,” Recto said in a statement on Wednesday.

On July 4, the high tribunal ruled in favor of increasing the IRA, giving local government units (LGUs) a share in the tax revenues of all national agencies, and not only the Bureau of Internal Revenue.

The senator said the SC ruling puts emphasis on the possibility of spreading growth and funding projects up to the grassroots level “without tinkering with the Constitution.”

“Pwedeng 50-50 or hating kapatid ang national at mga lokal. Pwedeng gawing 60-40 in favor of local governments . Pwedeng taasan pa based on a new division of labor,” Recto said.

“Kung decentralized ang ilang functions which LGUs can better do at less cost, then dagdagan ang pondo nila,” he added.

The country’s economic managers have disagreed with the SC ruling, saying that it will pose a risk to effective public financial management, aside from the fact that it may be too late to add in the proposed 2019 national budget.

READ: DBM to appeal ruling on LGU share from national taxes

Economic managers recommend motion for reconsideration vs SC ruling on source of LGUs’ IRA

However, Recto said if the government cannot afford to give the IRA to LGUs, then it is a cause for concern as shifting to federalism would cost more.

“Kung hindi nila kayang pondohan ang isang desisyon na inutos mismo ng Korte Suprema, paano pa kaya ang gastos ng pederalismo na di hamak ay mas malaki?” he said.

He also added that economic managers should not worry about the constitutionality of inserting the IRA provision in the 2019 budget.

“Bawal kasing magpasa ng isang national budget na ang total amount ay lampas sa hinihingi ng Pangulo, kaya pwede supplemental na lang,” Recto explained. “Kung sa loob naman ng 2019 budget kukunin ang kinakailangang pondohan – P195 billion – ay mahihirapan namang hanapan ng puwang sa isang budget na maliit na ang elbow room for alteration.”

“Kung may off-budget means of settling this payable, pwede rin i-explore for as long as legal and fiscally-responsible, meaning hindi uutang na malaki ang interest,” he added.   /vvp