Reduction in National Tax allocation projected

Reduction in National Tax allocation projected

The City Budget Office confirmed that the local government will be getting reduced national tax allocation (NATA) in the next two years, particularly by 2023 and 2024, because of the significant reduction in the tax collections of the government due to the heavy impact inflicted by the Corona Virus Disease (COVID) 2019 pandemic to the global economy.

City Budget Officer lawyer Leticia O. Clemente stated that the budget department already informed all local governments on the projected reduction of their NATA in the next 2 years, thus, provinces, cities, municipalities and barangays should be prepared to deal with the situation so as not to compromise the delivery of basic services.

She pointed out that the way to go for local governments is to open their doors for potential investments that will help in augmenting the projected reduction on the NATA that will be realized in the next 2 years which is caused by the impact of the pandemic to the country’s economy.

For this year, the city was able to get a NATA that is 37 percent higher than its annual Internal Revenue Allotment (IRA) because of the implementation of the Supreme Court (SC) ruling on the Mandanas-Garcia case which defined taxes as those that are being collected by the Bureau of Internal Revenue (BIR) but also those that are being collected by the Bureau of Customs (BOC) and other revenue-generating agencies of the government.

Under established rules and regulations on the computation of the IRA now NATA of local governments, the same is based on the tax collections of the government that date back to 3 years prior to the fiscal year.

However, Clemente pointed out that for 2023 and 2024, the increase in NATA will not be realized by the local governments because of the significant decline in the revenue that was generated by the government during the pandemic period based on the country’s Gross Domestic Product (GDP) where it realized a negative 9.6 percent dip in 2020 although it reflected a 5.6 growth in 2021.

The city budget officer stipulated that it is high time for the local government to entice possible investors that will put up their desired businesses in the city through various modes to help in gradually and safely reviving the local economy to bring back the employment opportunities for the displaced workers and the robust economic activities of the people that will contribute in ongoing efforts to establish sustainable local sources of revenue.

She admitted that there had been proposed high impact development projects that had been lined up in the past which were supposed to be offered for interested investors but the same did not push through for various reasons although the same are again being revived to allow investors to infuse the appropriate capital that will spur economic growth and bring back the vibrance of the local economy that had been sidelined over the past 2 years primarily due to the prevailing health crisis.

From the previous P1.1 billion IRA of the city, the same increased by around P380 million for this year that represents the 37 percent increase based on the Mandanas-Garcia doctrine of the SC. – Dexter A. See