THE share of local governments from national tax collections will increase to P1.32 trillion next year as part of President Ferdinand Marcos Jr.'s continued push for stronger local governance, Malacañang said Wednesday.
Executive Secretary Ralph Recto said the National Tax Allotment (NTA) for LGUs would jump by P129.32 billion from the 2026 level, a "non-partisan, formula-based" allocation that would be highlighted in the president's fifth State of the Nation Address 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 barangay (villages)," Recto said in a statement.
The P1.32 trillion NTA for 2027 is based on internal revenue collections in 2024, in accordance with the law requiring the allotment to be computed using collections from three years prior.
Recto said the allocation formula is fixed by law and cannot be altered.
"The law and regulations state that the dividends of local governments are based on national tax collections," he said.
Recto said the amount would be among the biggest ticket items in the proposed 2027 national budget, which is being finalized by the Department of Budget and Management.
Under the NTA allocation formula, around 83 provinces will receive P303.56 billion; 149 cities, P303.56 billion; 1,491 towns, P448.84 billion; and 41,912 villages, P263.97 billion.
"That indexation is set in stone, beyond alteration. As such, they are in the nature of automatic appropriations," Recto said.
About P990.68 of the P1.32 trillion NTA would 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.
Recto said that an LGU’s share would be determined by its population and land area.
For 2026, Davao City received the biggest city allocation at P10.1 billion, nearly 15 percent higher than the previous year.
In Metro Manila, Quezon City received P9.82 billion, Manila P6.09 billion, Caloocan City P5.5 billion, Taguig City P4.4 billion, and Pasig City P3.05 billion.
"So next year, not only they, but all LGUs will receive increases," Recto said.
The NTA increase follows the continued growth of government tax collections and the implementation of the Supreme Court's Mandanas-Garcia ruling, which expanded the revenue base used in computing LGU shares.
Aside from the NTA, Recto said that the Marcos administration increased the Local Government Support Fund (LGSF) to a record high of P57.87 billion for 2026 to further strengthen partnerships between national agencies and LGUs in implementing development projects.
"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.
Recto said that Marcos has consistently emphasized that national government projects and local government initiatives should not be treated separately.
He said that one example was the Department of Education's partnership with local governments to address the country's classroom shortage by allowing LGUs to implement school infrastructure projects.
"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 now a pivot toward LGUs, making them partners in implementing projects," Recto said.
