Fiscal Sustainability, Equity, and Allocative Efficiency in the Light of the 2019 Supreme Court Ruling on the LGUs’

Share in National Taxes

Reaction Paper

I. Underlying Issues

The underlying issues presented in the paper are the following: (1) The proposal
regarding the review of the initial decision made on the 3rd of July, 2018 about the petitions filed
by Mandanas et al. and Garcia with regards to what the petitioners believed to be miscalculations
of the Internal Revenue Allotment (IRA) or the Local Government Units’ share in the National
Internal Revenue Taxes. This is to ensure the sustainability of the national government’s fiscal
position. (2) Vertical and horizontal fiscal imbalance across different levels of Local
Government Units. (Manasan 2020)

II. Nature of the Paper

The nature of the paper is an observational study. This means that the data were gathered
from archived databases or written sources rather than under monitored experimental conditions.

III. Findings

The issues’ conclusion is that the central government has to use the volume of
appropriations for reassigned Programs, Activities, and Projects that are in excess of the rise in
the Internal Revenue Allotment and the government's counterpart of matching grants in the
General Appropriateness Act Budget of each of the National Government Agencies. (Manasan
2020)

IV. Relevance or Contributions to the Existing Body of Knowledge

Most of the people often pay taxes without knowing where the money will go. The paper
is relevant in the sense that it gives awareness about how financial related matters work on the
share of Local Government Units in National Taxes. Knowing this matter enables a person to
better understand how the financial related matters work in the Local Government units and
gives a person the idea on where will the money of a taxpayer will go.

V. Limitations
 The paper uses too much acronyms. Although the paper provided a list of the acronyms
used and their corresponding meanings, it is annoying. Considering the fact that the subject is
complex, and a person who is trying to focus with what he is reading and then encounters
acronym will get distracted since he will have to look again the meaning of the acronym.

VI. Thoughts and Opinions on the Subject Matter

The subject matter is timely and relevant. It is timely in the sense that there are many
issues that are happening now concerning the national budget. The subject matter allows the
reader to have a bird’s eye view over the recent issues that are happening. It is relevant in the
sense that it allows the reader to relate with the current issues regarding the national budget.

VII. Potential Future Research Ideas Related to the Problem that seems Interesting,
Relevant and Significant to Philippine Setting

The findings of the paper have potential for future research in Philippine setting. The
following are the research that can be conducted in the Philippines:
1. Revisiting and Recalculating the National Budget and its impact towards
Equalization of grants between Local and National Government Units
2. A Review on the Local Government Units’ involvement in Income Generating
Projects

References:

Manasan, R. (2020). Fiscal Sustainability, Equity, and Allocative Efficiency in the Light of the
2019 Supreme Court Ruling on the LGUs’ Share in National Taxes.
https://pidswebs.pids.gov.ph/CDN/PUBLICATIONS/pidsdps2018.pdf