LGUs to Receive Larger National Tax Share in 2025

Local government units (LGUs) are set to receive 35% of the national taxes in 2025 as the earmarking of additional revenues under the TRAIN Law expires, the Department of Finance (DOF) announced.

Finance Secretary Ralph Recto said this increase from the current 32% aligns with the 2019 Mandanas-Garcia Supreme Court ruling, which expanded LGUs’ fiscal autonomy.

“By 2026, there will be additional revenues for the local government units,” Recto said.

The DOF confirmed that computations for the National Tax Allotment (NTA) were based on the Supreme Court ruling, legal opinions from the Department of Justice, and resolutions from the Department of Budget and Management.

The Mandanas-Garcia decision mandated that 40% of all national tax collections, excluding special purpose funds and certain earmarked revenues, form the base for LGUs’ NTA.

Recto emphasized transparency in the computations, assuring local officials that the government is committed to giving LGUs their fair share.

“I reminded them that the President was a former governor. He understands local government. We are interested to make sure that the local governments get their fair share,” Recto said.

In a meeting with city mayors on January 15, 2025, Recto addressed concerns about the NTA calculations and resolved most issues, noting that “99%” of the concerns were settled.

Baguio City Mayor Benjamin Magalong, Quezon City Mayor Joy Belmonte, and Dumaguete City Mayor Felipe Antonio Remollo were among the mayors who expressed gratitude for the productive dialogue.

Magalong even apologized to Recto for his earlier remarks suggesting LGUs were being shortchanged.

“We did not change or amend anything. This is based on the Supreme Court ruling and a Development Budget Coordination Committee resolution, which was made in consultation with the LGUs. We are very transparent,” Recto said.

The Mandanas-Garcia ruling, implemented in 2022, was designed to bolster LGU fiscal capacities, granting them a larger share of national taxes to improve service delivery for Filipinos.

Recto assured local officials that the DOF remains open to continued collaboration with LGUs to optimize resource use and strengthen fiscal management.