Local government units (LGUs) may soon receive a bigger share of the government鈥檚 revenue collection following a Supreme Court decision stating that they are entitled to a share from taxes collected by other agencies, not just the Bureau of Internal Revenue (BIR).
Voting 10-3, the high court partly granted the 2012 petition filed by Batangas Governor Hermilando Mandanas for the national government to comply with the constitutional provision that LGUs should receive a 鈥渏ust share鈥� from national taxes.
Mandanas said it is important for the government to follow the Constitution so that the LGUs can expediently serve their constituents through delivery of basic services.
鈥淭he Court, voting 10-3, interpreted the basis for the 鈥榡ust share鈥� of local government units under Section 6, Article X of the 1987 Constitution as being based on all national taxes and not only national internal revenue taxes, as provided in Section 284 of the Local Government Code,鈥� the Supreme Court said in a brief statement.
Section 284 of Republic Act No. 7160, the law which created the LGUs, states that provincial, city and municipal governments must receive 40 percent of the total national internal revenue taxes collected by the central government.
National taxes include customs tariffs and taxes collected by other state agencies such as the Bureau of Immigration.
Internal revenue taxes, meanwhile, refer to taxes imposed by the BIR such as income taxes, estate and donor鈥檚 taxes, value-added tax, excise taxes, and documentary stamp taxes. /ee
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