‘Only P13.5 billion needed for federalism shift’

MANILA, Philippines — A hefty P13.54 billion is needed for the country’s shift to a federal form of government, the consultative committee (Concom) estimates. 

In a 25-page presentation, the Concom said an “incremental cost” of P2.9 billion would be allotted for 12 new senators and P4.06 billion for 108 new congressmen, which is one-third of the current setup.

Another P1.08 billion would be allotted for 450 new regional assemblymen; P3.6 billion for 18 federated regions; P900 million for contingency of the 18 regions; and P1 billion for intergovernmental commission. 

The Concom, however, emphasized its “computation does not factor in savings from the rationalization of the national bureaucracy” as it assures the public that more savings than expenditures is expected in the long run. 

“No drastic change occurs after ratification. Transition is to be carried out in phases with hardly any disruption in the economy and fiscal administration,” the Concom said. 

The Concom’s computation came after the National Economic and Development Authority (NEDA) said the country would need around P400.1 billion for the first two scenarios under federal government. 

The NEDA said an additional P156.6 billion would be needed for the first scenario and P243.5 billion under the second. 

The Concom said the country would generate around P50 billion to P70 billion under a federal government as the 18 federated regions will be given the power to collect taxes on their own. 

Under Section 2, Article XIII of the proposed charter, federated regions can collect donor’s documentary stamp, estate taxes, real property tax, professional tax, franchise tax, games and amusement tax. 

The federated regions can also collect environmental, pollution and similar taxes, road users tax, vehicle registration fee, transport franchise fees and other local taxes. 

The Concom added 50 percent of all collected income tax, excise tax, value-added tax and customs duties should also be divided equally among all federated regions.

An additional three percent of the General Appropriations Act is reserved for the Equalization Fund. 

“No double taxation shall be allowed,” the Concom said. 

The Concom and President Duterte’s economic managers have recently argued on the risks that federalism might derail the country’s economic growth. 

Former chief justice and Concom chairman Reynato Puno said they met with Duterte’s economic managers on Wednesday and discussed the “correct fiscal formula” for federalism.