Under draft Constitution, regions will get about 50% of collected taxes, duties

Under the draft federal Constitution of President Rodrigo Duterte’s Consultative Committee (Con-com), at least P1.050 trillion yearly financial resources will be divided among the proposed 18 Federated Regions, the body’s spokesperson bared on Monday.

In a briefing, Con-com Spokesman Conrado “Ding” Generoso explained that when the country shifts to a federal system under the draft of the proposed new Charter, Federated Regions would be given a share of not less than 50 percent of all the collected taxes on income, excise, value-added tax, and customs duties.

The amount will be equally divided among regions and automatically released, he added.

Generoso further said that based on 2017 Bureau of Internal Revenue data, this 50 percent fund from taxes could amount to P1 trillion.

On top of this automatically-appropriated fund, the Con-com also proposed an equalization fund which will not be less than 3 percent of the annual General Appropriations Act, or about P40 to 50 billion.

These funds, the spokesman said, is “money that will be directly in the hands” and will be “under the control” of the Federated regions’ governments.

The equalization fund should be distributed based on the needs of each region, with priority to those that require support to achieve financial viability and economic sustainability as determined by the Federal Intergovernmental Commission (FIGC), Generoso added.

Generoso also said the Federal Government, or the central national government, and the Federated Regions should ensure that taxation would be “uniform, equitable and progressive, and that no double taxation would be allowed.”

Fiscal powers

Under the proposed Constitution, the Federal Government has power to levy and collect all taxes, duties, fees, charges, and other impositions except those granted to the Federated Regions, according to Generoso.

The Federated Regions have the power to levy and collect the following taxes, licenses and fees:
• Real Property Tax;
• Estate Tax;
• Donor’s Tax;
• Documentary Stamp Tax;
• Professional Tax;
• Franchise Tax;
• Environmental Tax, Pollution Tax, and similar taxes;
• Road Users Tax;
• Vehicle Registration Fees;
• Transport Franchise Fees; and
• Local taxes and other taxes which may be granted by federal law.

Not same as IRA

At present, local government units (LGUs) receive annual funds in the form of the internal revenue allotment (IRA).

However, Generoso said the 50 percent and the equalization funds will be different from the IRA , which he noted as an “inequitable” system that “they are trying to cure.”

Under the Local Government Code (LGC), the IRA share of local government units is 40 percent of national internal revenue taxes collected in the third fiscal year preceding the current fiscal year while the remaining 60 percent goes to the national government.

An LGU’s IRA share is computed based on its population and land area.

Under Con-com’s draft however, the government of the Federated Regions would have the power to “determine the share of its cities,” and “create their own formulas for sharing,” Generoso said.

FIGC

Meanwhile, Generoso said the FIGC would be tasked to craft the criteria and rules in the prioritizing the utilization of the equalization fund, among others.

The body will be composed of one chair and 14 members: two appointed by the president, two members will come from the House of Representatives, two from Senate, four appointed by the Council of Regional Governors, and one representative each from the Bangsamoro region, the Region of Cordillera, as well as the secretaries of the Department of Budget and Management and the Department of Finance.

The four appointed by the Council of Regional Governors should be experts of law, economy, governance and/or public finance.

In the same media briefing, Generoso also discussed Con-com’s proposed design and political structure of and powers given to the Federal Government, or the central national government, and the 18 Federated Regions.

READ: Con-com proposes Federal gov’t powers over basic education, trade, banking

Con-com en banc is set to vote on its entire draft of the Charter on July 3, Tuesday morning.

Copies of the final draft will then be submitted to the President on or before July 9.

This will be followed by regional presentations and consultations, findings of which will form part of the final committee report. — With reports from Micah Yurielle P. Atienza, Intern, INQUIRER.net

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