Palace: LGUs to get tax share of P1.32T in 2027

Executive Secretary Ralph Recto —PHOTO FROM OFFICE OF THE EXECUTIVE SECRETARY/FACEBOOK

MANILA, Philippines — The share of local government units (LGUs) from national tax collections in 2027 will increase by 11 percent to P1.32 trillion, with President Marcos expected to highlight the “nonpartisan, formula-based” basis of this allotment in his fifth State of the Nation Address (Sona) on July 27.

“As a former local executive official himself, the President sees and honors these as people’s entitlements. These are guaranteed plowbacks that will go from big cities to the remotest barangays,” Executive Secretary Ralph Recto said on Wednesday.

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Malacañang assured LGUs that their respective shares from the National Tax Allotment (NTA) are devoid of any partisan colors, citing how Davao City—the hometown and political base of the Duterte family, whose members are the most vocal critics of the Marcos administration—is set to still receive more than P11 billion.

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Set in stone

The NTA’s amount for 2027 is based on the 2024 internal revenue collections, or three years prior, as mandated by law and jurisprudence.

READ: DBM releases P1 trillion National Tax Allotment of LGUs

“That indexation is set in stone, beyond alteration. As such, they are in the nature of automatic appropriations,” Recto said.

“The law and regulations state that the dividends of local government units are based on the collection of national taxes,” he added, citing the Local Government Code of 1991 and the Mandanas-Garcia ruling of the Supreme Court in 2018.

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The P1.32-trillion NTA will be “one of the biggest ticket items” in the proposed 2027 national budget that the Department of Budget and Management (DBM) is finalizing.

READ: League of Municipalities seeks bigger nat’l tax share for LGUs

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The Mandanas-Garcia ruling triggered then-President Rodrigo Duterte to issue Executive Order No. 238 in 2021 for the full devolution of basic services to LGUs in 2024.

The deadline for the full devolution process was extended to 2028 by Mr. Marcos through EO 103 issued in 2025, because of difficulties in the transition phase, especially among the lowest-income municipalities.

“The national government is working on the implementation of EO 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,” Budget Secretary Kim Robert de Leon said in a message to reporters.

Under Local Budget Memorandum No. 94 issued on June 10, the DBM said the indicative NTA allocation for 2027 is nearly 11 percent higher than the P1.19 trillion allotted in 2026, an increase of P129.32 billion.

Of the total allocation, P990.68 billion will come from 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.

The NTA will be distributed among local governments, with 83 provinces receiving a combined P303.56 billion. A total of 149 cities will get P303.56 billion while 1,491 municipalities will receive P448.84 billion and 41,912 barangays will share P263.97 billion.

The share of an LGU from the NTA is primarily determined by its population and land area.

Biggest recipients

Among the 149 cities in the country, Davao City is again set to receive the largest NTA share for 2027 amounting to P11.23 billion, up by almost 11 percent from this year’s P10.14 billion.

The city covers 2,443.61 square kilometers, making it the largest city in terms of land area. It is the third-most populous city in the country, after Quezon City and Manila, with a population of 1.85 million based on the 2024 census.

In the National Capital Region, the biggest recipients of the 2027 NTA include Quezon City (P10.88 billion), Manila (P6.75 billion), Caloocan City (P6.19 billion), Taguig City (P4.87 billion), and Pasig City (P3.38 billion).

“So next year, there will be another increase not only for these cities, but for all local government units,” Recto said.

On top of the NTA, Mr. Marcos initiated the increase of the Local Government Support Fund (LGSF) to a record high P57.87 billion for 2026.

About P11.2 billion of the LGSF this year will be used for the Growth Equity Fund, disbursed as financial assistance for poor, disadvantaged, lagging and low-income LGUs.

“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,” Recto said.

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“In many meetings, he said that treating national government projects as separate from local government projects is a false dichotomy. That is why there is a shift toward involving LGUs, making them partners in implementing projects,” he added. —WITH A REPORT FROM ANDRE ESGUERRA, INTERN