SC’s IRA decision to cost govt P160B
A Supreme Court (SC) ruling requiring increased transfers from the central to local governments could cost P160 billion next year, Budget Secretary Benjamin Diokno said on Wednesday.
“The court ruled that the decision should be applied prospectively. So we estimate that for fiscal year 2019, it will cost us P160 billion if it’s going to be implemented next year,” Diokno told reporters.
The high court has declared that internal revenue allotments (IRA) for local governments should be based on all national taxes, not just internal revenue taxes.
Diokno said it was too late to insert additional appropriations in the P3.757-trillion 2019 national budget as this had already been submitted to Congress, and that insisting on the ruling’s implementation would affect the government’s development priorities.
“[W]e fear that the application of the ruling in the incoming fiscal year might distort the funding earmarked for programs and projects identified by the national government,” he said.
Diokno noted that the Department of Budget and Management, in coordination with the Office of the Solicitor General, would be filing a motion for reconsideration within 15 days from the receipt of the SC ruling.
“As of yesterday, July 24, we have not yet received the decision. So given the significance and the impact of the decision, we expect the SC en banc will take its time to meticulously thresh out the issues and reconsider the decision,” he said.
Nevertheless, he stressed that the government would “faithfully” comply with the Supreme Court’s decision if it became become final and executory.
Uncertainty over the exact nature of the high court decision have led economic managers to claim that the government could be forced to shell out as much as P6 trillion in unpaid IRA.
Debt watchers Fitch Ratings and Moody’s Investors Service also mentioned the ruling in their latest assessments on the Philippines’ credit standing.
Fitch said the decision “could put upward pressure on the general government debt ratio, as well as creating challenges for effective public finance management.”
Moody’s, for its part, noted that “there may be a gap between the national and local governments with respect to their ability to manage fiscal resources, posing a risk to the improved fiscal discipline that has characterized national government finances over the past decade.”
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