THE
BUSINESS OF GOVERNANCE
Por Dios por Santo, where will the money
be coming from? The level of debt financing
is already accelerating. The president has admitted that the year
2008 will see a
mounting deficit. The Department of Budget and Management bravely
promises a
balanced budget by 2010. All these depressing news do not take
into consideration the
Pimentel resolution, the MOA-AD and the BJE. Everyone is calling
for public consultations. May
I humbly propose one more item: financing federalism.
This is the third time I am writing about
financing federalism. The first time was three years ago, when
Newsbreak asked me to write a short piece when the debate about
changing the Constitution and shifting to federalism was heating
up . The second time was last April 28, 2008, soon after Sen.
Aquilino “Nene” Pimentel filed a resolution proposing
a change in the form of our government to a federal system.
Recently
the government announced that it is going to “piggy back”
on the Pimentel resolution to pave the way for the constitutional
changes which are surely going to be required if the MOA will
be signed. Once more, federalism is on the agenda. This time,
it is complicated by the MOA on Ancestral Domain, which by itself
has already triggered battles between the MILF and the military,
as well as intellectual battles and debates among experts, civil
society organizations and ardent defenders of the government.
It has thrown the country into an uproar.
Suspicion
is rife that the shift to federalism is a ploy to ensure the
president’s hold on power beyond 2010.
Many aspects of federalism have been discussed and debated about.
As usual, the financing side is ignored. The excuse is that
“it can be discussed later, once federalism is approved
by the people by a change in the constitution.” Both proponents
and opponents of federalism assume that financing is not as
important as the political issues.
Before
the public votes for or against federalism, citizens should
be aware of its financial implications. It is not fair to our
people to rush like lemmings to federalism without being aware
of how much it will cost them.
My
April 28 column touched on three aspects: increase in the tax
burden of citizens, the sharing scheme of revenues among federal,
state and local governments, increased level of expenditures,
and debt.
What
will be the effect on the tax burden of the citizen? Definitely,
his or her tax burden will increase. This is because the citizen
will be supporting three layers of government—federal,
state and local governments. The poor taxpayer is already groaning
under the burden of national and local taxes. State taxes will
definitely add to the tax burden.
The
state and the local governments are empowered to impose additional
taxes and fees as they see fit.
During
the last election period, I was asked to give a presentation
on financing federalism to barangay officials of a big city.
At the end of my presentation, I asked the participants if they
still wanted cha-cha. All of them shouted, “hindi”!
The spectre of additional taxes was enough to scare them off.
Why
will levels of expenditures increase? In addition to national
and local governments, state expenditures have to be paid for.
Everything will be in threes: three sets of executive agencies
or bureaucracies, 3 sets of buildings and offices, three sets
of employees and three sets of legislatures. The state legislature
will have the usual legislators, and sector representatives.
What’s more, the state can create state corporations and
quasi-public corporations. Is the harassed tax payer prepared
to pay for all these?.
As
for the national debt, the states will share in the payment
of these debts. I can already imagine the protests of the states
that the national debt is not theirs, anyway. This will be a
very troublesome issue. How will the sharing be determined by
the proposed commission on debt?
Enter
the MOA on Ancestral Domain
The
MOA on Ancestral Domain is further complicating matters in the
proposed federal government. It is supposed to ride on the Pimentel
resolution. However, there are differences between the Bangsamoro
Juridical Entity (BJE) and the Bangsamoro State contemplated
in the resolution.
Revenue
sharing is also different. For example, on the matter of revenues
from the exploitation of natural resources, the Pimentel resolution
provides for a 30:70 sharing while the BJE calls for 20:80 sharing.
There are also differences on the matter of sharing of other
taxes and revenues.
Pre-Federalism
expenditures
Wait
a minute. There will be huge expenditures before the federal
state can be set up: the calling of the Constituent Assembly
to agree on the changes, the nationwide consultations which
necessarily have to be held, and the two plebiscites which have
to be conducted: one for constitutional change and the other
for the consent of places which will be covered by the BJE.
Por
Dios por Santo, where will the money be coming from? The level
of debt financing is already accelerating. The president has
admitted that the year 2008 will see a mounting deficit. The
Department of Budget and Management bravely promises a balanced
budget by 2010. All these depressing news do not take into consideration
the Pimentel resolution, the MOA-AD and the BJE.
Everyone
is calling for public consultations. May I humbly propose one
more item: financing federalism.
