Local governments to receive P1.1 trillon in 2022 budget

MANILA, Philippines — Local governments will get their biggest share ever from the national budget next year, with a record P1.116 trillion or more than a fifth of the proposed P5.024-trillion spending program for 2022 set aside to finance local government’s bigger responsibilities.

Based on the fiscal year 2022 National Expenditure Program (NEP) submitted by the Department of Budget and Management (DBM) to Congress on Monday, local governments will receive P959.04 billion in national tax allotment (NTA) — formerly called internal revenue allotment (IRA) — next year.

The Supreme Court granted in 2018 and reaffirmed a year later the petitions of Batangas Gov. Hermilando Mandanas and former Bataan Gov. Enrique Garcia Jr., which stated that the local governments’ IRA should come from 40 percent of the collection of all national taxes—the Bureau of Internal Revenue’s (BIR) tax take, as well as the Bureau of Customs’ collections of import duties and other taxes.

Big jump in IRA

Up to this year, local governments’ IRA represented two-fifths of national internal revenue taxes collected by the BIR.

The NTA, meanwhile, was based on local governments’ 40-percent share from all tax revenues collected three years prior, hence next year’s allotment had 2019 as base year.

Local governments’ 2022 NTA jumped from an estimated IRA of only P846.31 billion for next year without the so-called Mandanas ruling. This year, local governments’ IRA amounted to P695.49 billion.

P1.9T for social services

Next year’s implementation of the Supreme Court’s 2018 decision on the Mandanas-Garcia petitions reduced the government’s fiscal space, such that President Duterte issued Executive Order No. 138 in June to transfer to local governments the responsibility to spend on local infrastructure, agriculture, social welfare, health care and livelihood, among other sectors included in the Local Government Code.

The biggest chunk of the proposed P5.024 trillion national budget for 2022 will be allocated to social services amounting to P1.922 trillion. The DBM said the amount would fund the government’s health-related services such as the continued implementation of the Universal Health Care Act, procurement of COVID-19 vaccines and personal protective equipment, among others.

The DBM said education-related programs, which includes the implementation of the Universal Access to Quality Tertiary Education, would also be prioritized.

The economic services sector will get P1.474 trillion or 29.3 percent of the budget, which is 11.4 percent higher compared to the 2021 budget.

The DBM said the bulk of the funds would go to the administrations’ flagship projects under the “Build, Build, Build” program.

The general services sector will get P862.7 billion or 17.2 percent of the budget; the debt burden with P541.3 billion or 10.8 percent; while defense spending will be at P224.4 billion.