DBM: Higher IRA won’t expand budget deficit
Credit to Author: MAYVELIN U. CARABALLO, TMT| Date: Tue, 27 Aug 2019 16:27:12 +0000
The Department of Budget and Management (DBM) assured on Tuesday that higher transfers from central to local government units (LGU) by 2022 would not incur a higher budget deficit for the government.
According to Budget Secretary Wendel Avisado, the fiscal impact of the Supreme Court (SC) ruling requiring a raise in the internal revenue allotment (IRA) of LGUs would be revenue-neutral.
“In other words, there [is] not going to be [an] increase in [the] deficit to make up for the larger transfer to LGUs, because it does not also pose any threat [to] the national government’s Build, Build, Build program, even as it will shift some resources from the national to the local,” Avisado said in a briefing at the DBM’s main office in Manila.
The government has set a 3.2-percent deficit ceiling for 2022 as it programmed to disburse P5.42 trillion against a revenue collection target of P4.42 trillion for the year.
Gov. Hermilando Mandanas of Batangas was the lead petitioner of the case filed in 2012, for which the High Court ruled that local governments’ IRA should be based on all national taxes and not just IR taxes.
The government estimated that the increase in IRA would reach P300 billion.
Some P575.5 billion in LGUs’ IRA shares from national internal revenue taxes collected in 2016 have been disbursed this year.
With a higher IRA, Avisado said, there is a need to match the revenue and expenditure functions of local governments.
“They have to be more prudent and make sure that there is responsible management of fiscal resources, and much more, improvement in the delivery of programs and services,” he said.
Earlier, the ruling was tagged as a domestic risk to Philippine economic growth. The government’s economic managers kept their growth forecast this year at 6.0 percent to 7.0 percent; 6.5 percent to 7.5 percent for 2020; and 7.0 percent to 8.0 percent for 2021 and 2022.