Connect with us

Hi, what are you looking for?

News

The effect of the Mandanas-Garcia ruling: A Northern Samar case study

FIRMBEE COM-UNSPLASH

The Mandanas-Garcia Ruling mandates the expansion of the income base for the computation of the national tax allocation (NTA) for local government units (LGUs) to include not only internal revenue collections but also customs collections. This assures LGUs with an additional 24% revenue share, aside from the 13.9% increase due to the increase in internal revenue collections. The figures look attractive especially for NTA-dependent LGUs like the barangays.

But how does this really look like in its first year’s implementation? Will the amount be enough to cover the devolved functions and services that the barangays need to deliver by virtue of the Executive Order No. 138?

To answer these questions, I look into Northern Samar as a focus province. Northern Samar is one of the provinces in the Philippines known for reducing poverty incidence from 51.8% in 2015 to 25.1% in the first semester of 2021. As a result, the province was stricken off the list of the top 20 poorest provinces in the country.

Northern Samar has readily available barangay-level national tax allocations data for fiscal years 2021 and 2022, making a pre- and during-the Mandanas-Garcia Ruling comparison possible.

Northern Samar has 24 municipalities and 569 barangays. On average, the barangay LGUs enjoy a 34.11% NTA increase as against the 24% increase at the national level.

Six barangays in the province enjoy an increase of more than 50% in NTA from 2021 to 2022. Two of these are in Pambujan, two in Catarman, and one each in Laoang and San Isidro. But the NTA increases are uneven. Twenty-one of the barangays receive NTA increases that are below the national average of 24%. Four of these are in Las Navas; three in Palapag; two each in Catarman, Lope de Vega and Pambujan; while the rest are from Catubig, Laoang, San Vicente, Biri, Gamay, Silvino Lobos and San Roque.

A total of 191 barangays have received more than P773,609.08 — the computed average NTA increase. But 23 barangays have received less than half a million-peso additional NTA. Clearly, the increase in NTA is not across the board. It still follows the formula laid down in Section 285 of the Local Government Code of 1991 which considers the population and equal sharing arrangements.

Are the additional NTAs of the barangays enough? The answer is “no.” For the local officials in island barangays, the bigger question is: Where is the NTA? Officials interviewed from these barangays say they are expecting an annual NTA increase, so what they received in 2022 is simply part of what they ought to have received. For those living in the mainland, especially those classified as urban barangays, the NTAs are not enough. The increase is not commensurate with the functions that they must perform and services they need to deliver.

During the COVID-19 pandemic, the barangay officials face not only a health issue but a complex event that highlights the problems in education, economy and livelihood, and peace and order. This is compounded by the lockdowns and community quarantines that limit mobility and compel their constituents working outside the province to return home. Hence, the population that the LGUs need to serve has increased, most of whom remain jobless.

The sudden increase of the population without the corresponding hike in income has become the biggest challenge among barangay officials. This has resulted not only in a loss of the already paltry revenues the barangay LGUs have been collecting but has also created acrimonious situations. As more and more find themselves unemployed, many become annoyed and sometimes pick quarrels with local officials who, being at the frontline, are easy targets.

On the education sector, while barangay LGUs are not directly involved in the provision of education-related services, they are still expected to make schools and child development centers function effectively. A number of barangay officials claim that their LGUs are tapped to satisfy the requirements in the Safe Schools Assessment Tool (SSAT). The SSAT is a list of 172 indicators that must be satisfied for schools to physically reopen. “The schools have limited funds so we have to pitch in with whatever we can provide,” claims Nolito Odtujap, the Punong Barangay of Aguin, Capul.

“We have to ensure that the children are safe on their way to and from the school. Thus, we have to deploy more barangay tanods (guards) and officials, and provide for the necessary health and hygiene kits,” adds Lerma Cula of Barangay Sagaosawan, also in Capul. But while some of those helping to ensure the safety of the children only receive an honorarium, health and hygiene-related kits and facilities need to be procured. This becomes an additional burden for Sagaosawan as well as for other barangays with small NTAs.

Barangay officials are worried over the coming fiscal years, from 2023 to 2025, when the NTAs are expected to decrease. The initial computation released by the Department of Budget and Management shows that LGU NTAs will be reduced by around 14%. This means an average reduction of around P427,000 per barangay LGU in Northern Samar.

All of the barangays in Northern Samar are NTA-dependent. In the short-term, these LGUs need technical and financial assistance from the municipal and provincial governments as well as national government agencies. For the technical assistance, barangay officials request policy guidance and capacity development on how to effectively manage the meager resources of their LGUs.

A priority is to revive the economy to generate more income both for the population and the LGU. Easing the health restrictions but doing so without sacrificing the essential protocols in municipalities that have contained COVID-19 infections is appropriate to revive the local economy.

For the long-term, barangay LGUs need assistance to reduce NTA dependency. National government agencies can provide technical support on how this can be done. This can be reinforced by providing lessons from LGUs that are no longer NTA-dependent.

The NTA allocation also needs re-examination. The current NTA is population-dependent, but population statistics are only updated every five years and do not consider shocks like the COVID-19 pandemic. When the economy grounds to a halt, people return to their barangays but the allocation that the barangay LGUs receive is based on their pre-pandemic situation.

The quality of life of the constituents must likewise be considered to make the tax allocation equitable and ensure that the increase in resources will benefit the barangay LGUs that need them most.

Judicious use of limited resources is possible through the use of data in planning. Providing early information on the available budget and data transparency help LGUs and stakeholders do project planning and prioritization. This gives substance to Bottom-Up Budgeting.

Jay A. Carizo is a local governance specialist working with the Galing Pook Foundation, which has partnered with Action for Economic Reforms in a data-driven development program that covers several LGUs, including those in Northern Samar.

Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!

You May Also Like

News

BW FILE PHOTO GROSS BORROWINGS by the National Government reached P2.6 trillion as of end-September as it continued to raise funds to respond to...

News

REUTERS By Luz Wendy T. Noble, Reporter The country’s foreign exchange buffers slightly increased as of end-October as the value of the central bank’s...

News

COVID-19 has had a significant impact on the mental health of Filipinos across different groups all over the archipelago. From frontline workers, parents balancing...

Financial Advisors

The healthcare ecosystem is one that has thrived on the cusp of scientific progress, benefitting enormously from the winds of change in the technological...

Disclaimer: Respect Investment.com, its managers, its employees, and assigns (collectively "The Company") do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2022 Respect Investment. All Rights Reserved.