The national government does not need to borrow to give local government units (LGUs) their share in customs revenues, and giving such share will even improve the country’s credit rating, according to the Luzon Regional Development Committee (Luzon RDCom).

Batangas Governor Hermilando I. Mandanas, chair of Luzon RDCom, said yesterday in a briefing that there was an approach to implementing the Supreme Court’s decision—that customs earnings should be included in the internal revenue allotment (IRA) for LGUs—that would avoid Budget Secretary Benjamin Diokno’s warning about the Philippines losing its investment-grade credit rating.

Mandanas was the lead petitioner of the case, filed in 2012, for which the high court issued the decision.

Diokno also said earlier that implementing the high court’s decision may force the national government to stop the construction of big-ticket projects.

Citing various estimates, the budget chief said implementing the decision would cost the national government P1.2 trillion to P6 trillion.

Mandanas said the high court’s ruling meant that the national government owed LGUs their share in the Bureau of Customs’ (BOC) collections since 1992, the year when the Local Government Code was enacted.

“The total accumulated differential has already reached approximately P1.5 trillion,” Mandanas said. “The collections of the BOC of the national taxes were not included in the computation of the IRA from 1992 up to the present.”

For 2019, Mandanas said LGUs’ share of customs earnings was estimated at a total of P200 billion.

Mandanas, a congressman when he filed the case for the automatic release of the IRA, said there were three ways that the Supreme Court’s decision could be implemented—the national government could borrow money, “recast” the national budget for 2019, or a do a combination of the first two options.

“I advocate the second option, recasting the budget would mean no additional amount (on top of the P3.75 trillion),” he said.

“The LGUs share can be provided by getting the funds of national line agencies earmarked for social services that are already devolved, and giving this to LGUs as their IRA,” Mandanas said.

“With the additional funds, local governments will be able to do more [for their constituents]—our credit rating will even improve,” he added.

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