Charter body eases fears of fiscal nightmare under federalism

Malacañang’s consultative committee that drafted a proposed federal constitution on Wednesday sought to ease fears of a fiscal nightmare under federalism.

Finance Secretary Carlos Domiguez III told the Senate finance committee earlier on Wednesday that the Philippines’ credit ratings would “go to hell” if the shift to federalism happened.

Dominguez also said the fiscal provisions of the draft constitution were very confusing.

Fiscal provisions quite clear

But Ding Generoso, spokesperson for the consultative committee, said “fiscal administration is quite clear in the draft Constitution.”

“The federal (national) government basically retains the taxation power, except for selected taxes and fees the collection of which will be transferred to the regional governments,” Generoso said in a statement.

“Who will pay for the national debt, [the] military, DFA (Department of Foreign Affairs), Bangko Sentral (ng Pilipinas, or BSP)? By definition of exclusive powers that belong to the federal government, these will all be concerns of the federal government,” he added.

Generoso said the sharing of tax collections under the draft Constitution would be 50 percent for the federal government and 50 percent for the regional governments.

“A little over P1 trillion will go to the federated regions—the taxes and fees that they will collect and the equal share in the top four revenue sources,” he said.

Generoso said the budgets allotted for the DFA, BSP and the military could be allocated by the federal government, since they are “untouched and remain intact with the federal government under the draft Charter.”

Power of the purse

“Congress continues to have the power to appropriate the budgets for these concerns, which are all federal,” he said.

“The BSP is the single agency responsible for monetary policies, which is an exclusive power of the federal government, thus if it ever needs additional capital, the federal government will provide for it,” he said.

Generoso also said the internal revenue allotment for local governments under federalism would “no longer be a concern of the federal government.”

“The power to distribute the shares of the [local governments] will belong to the regional governments,” he said.

“The corresponding amount is part of the P1 trillion that correspond to the 50-percent share of the regions in the top four revenue sources,” he said.