The son and namesake of one of the victorious petitioners in the case on local governments’ share in all national taxes again questioned how the government is circumventing the spirit of the Supreme Court’s ruling on internal revenue allotments (IRA).
“After waiting for years, the favorable ruling was finally handed. But the expectation of greater fiscal flexibility is again undermined by the sudden push of the national government to implement full devolution and order to source the corresponding fund from devolved services from the just share of the [local governments] in national taxes,” said Bataan Rep. Jose Enrique Garcia III.
The Bataan congressman is a son of the now-deceased Bataan political magnate Enrique “Tet” Garcia Jr., who filed in 2013 the original petition asking the high court to order the national government to comply with the Constitution and give local governments a just share of all national taxes.
Batangas Gov. Hermilando Mandanas and several other Batangas officials later filed a similar appeal, but since Tet Garcia died in 2016, the Supreme Court’s landmark decision in 2018 has since been known as the Mandanas ruling.
In the ruling, the Supreme Court said local governments’ share of national taxes must be calculated from all taxes and that these funds were to be given automatically for whatever purposes local governments deem fit.
But the national government implemented the Supreme Court ruling in such a way that the funds would only be released for certain purposes to be determined by the national government, contradicting the high court’s acknowledgment of the importance of local government autonomy.
The younger Garcia, who replaced his father in the Supreme Court petition, said in a privilege speech in December that the national government’s implementation negates the gains that local governments are supposed to enjoy.
Local governments are supposed to be getting a budget windfall this year, but Garcia said the windfall would actually go to services the national government paid for in the past, in the guise of a “full devolution of public services.”
“By implementing the full devolution, the national government actually managed to extricate itself from the responsibility of providing larger national tax allocation to [local governments] and at the same time pass on the responsibility of funding the basic services directed to be devolved to the [local governments] under the Local Government Code,” he said.
Shifting responsibility
With this move, Garcia said the national government was able to comply with the Supreme Court ruling “without actually assuming additional fiscal burden by shifting the responsibility to the [local governments].”
“In a sense, the push for full devolution was impelled not by a determination that the [local governments] are now reasonably capacitated to assume the devolved functions, but perhaps more of the desire to cushion the fiscal impact of the increased just share of [local governments] on the national budget,” he said.
He said the Garcia-Mandanas ruling was not about how devolution would be implemented but about the local governments’ just share in national taxes.
According to him, the local governments’ resources were stretched due to the COVID-19 pandemic and would certainly take years for them to recover.
“This makes their need for continuing support from the national government even more imperative,” he said.
Contrary to the ruling of the Supreme Court, Garcia said the Department of Finance deducted from the national tax base various items which do not appear to meet the conditions under the high court’s decision.
“The deduction will effectively continue to withhold from the [local governments] their entitlement to the accurate computation of their just share in national taxes,” he said.
He said he would be filing a resolution seeking an investigation to inquire into the validity of excluding various items from the national tax base. He urged President Duterte to order his economic and fiscal managers to abide by the “clear and unequivocal” Garcia-Mandanas ruling.