LGUs’ tax allotments to rise 11% in 2027

By Erika Mae P. Sinaking, Reporter

LOCAL GOVERNMENT UNITS (LGUs) will receive P1.32 trillion in national tax allotments (NTA) in 2027, giving provinces, cities, and villages a bigger budget for public services and infrastructure.

The allocation, one of the biggest spending items in the proposed 2027 national budget, is automatically determined by law based on national tax collections and cannot be reduced once revenues are established.

“That indexation is set in stone, beyond alteration,” Executive Secretary Ralph G. Recto said in a statement on Wednesday. “As such, they are in the nature of automatic appropriations.”

The 2027 allotment is about 11% or P129.32 billion higher than the roughly P1.19 trillion allocated this year and is expected to be among the fiscal measures President Ferdinand R. Marcos, Jr. will cite in his State of the Nation Address on July 27.

Mr. Recto said the NTA will be “one of the biggest ticket items” in the proposed 2027 national budget being finalized by the Department of Budget and Management (DBM).

Citing a DBM memorandum, Mr. Recto said 83 provinces will share P303.56 billion, while 149 cities will share P303.56 billion under the NTA allocation formula, which is based on population, land area and equal sharing.

The biggest portion will go to 1,491 municipalities, which will divide P448.84 billion, while 41,912 barangays are set to receive P263.97 billion.

Among cities, Davao City will receive the biggest allocation in 2027 at P11.23 billion, rising by 11% or P1.09 billion from the P10.14 billion it received this year.

Quezon City will have the second-biggest NTA share with P10.88 billion next year, up by 11% from P9.83 billion this year.

Manila’s share of the NTA is at P6.75 billion next year, up by P654.98 million, while Zamboanga City’s share is at P6.55 billion, increasing by P635.45 million from this year.

Caloocan City’s NTA share will also increase by P600.9 million to P6.19 billion next year, while Puerto Princesa City will see its NTA jump by P594.09 million to P6.12 billion next year.

For next year, Taguig City will receive an NTA of P4.87 billion, up by P472.65 million, while Cebu City will get P4.26 billion, up by P413.14 million.

Next year, Antipolo City will receive an NTA of P4.07 billion, P395.18 million higher from this year’s allocation, while General Santos City will get P3.81 billion, up by P369.53 million.

Of the P1.32-trillion NTA for 2027, P990.68 billion will come from the Bureau of Internal Revenue collections, P329.09 billion from the Bureau of Customs and P63.6 million from other collections certified by the Bureau of the Treasury.

Budget Secretary Kim Robert C. de Leon said the increase in NTA coincides with preparations for the phased devolution of additional functions to local governments.

“The National Government is working on the implementation of Executive Order (EO) No. 103, s. 2025, which mandates the phased implementation of full devolution of functions to LGUs starting 2027 for cities and in 2028 for provinces and municipalities,” Mr. de Leon said in a message sent to reporters.

Under the EO, the government established the Growth Equity Fund to address inequalities during this transition and assist “poor, disadvantaged, lagging, and low-income LGUs.”

Mr. Recto also said that the government is supplementing mandatory tax allotments with a P57.87-billion local government support fund in the 2026 budget to facilitate local implementation of national and local programs.

“The conventional and traditional thinking is that the NTA for LGUs is enough. But the President said we should tap the expertise and resources of LGUs in implementing national projects and programs,” he said.

Mr. Recto said national agencies have increasingly partnered with local governments in implementing infrastructure and service-delivery programs, citing education projects aimed at addressing classroom shortages as one example.

“Increasing the budget for local service delivery is always a good direction. It brings the budget closer to the people. Especially for poor local governments, any increase in budget is significant and very much needed,” Joy G. Aceron, convenor-director at transparency advocacy group G-Watch told BusinessWorld via Facebook chat.

She emphasized that higher allotments have successfully translated into better health facilities in areas where local governments are responsive.

“The factor that ensures this link is a semblance of good local governance. It happened in local governments that are responsive to the citizens and are with working transparency, participation and accountability systems,” she said.

“Not many local governments have the needed safeguards. There are requirements for proactive disclosure, transparency seals, monitoring systems, consultations, but the effectiveness of these vary sharply across local governments,” she said.

She cautioned that many local units still lack necessary safeguards, noting that national and local governments must actively enable these mechanisms to ensure that record budget increases lead to commensurate improvements in public service delivery.