By Benjamin R. Punongbayan

I WAS very surprised about the final output of the Consultative Committee to Review the 1987 Constitution. The resulting proposed constitution is not federalism at all!

I would describe the resulting document as providing a bit more decentralization and a slightly increased internal revenue allocation (IRA). I equate federalism to a government structure with a high level of local autonomy. The draft constitution does not have it.

The central government retains much of the government powers: taxation; national economic planning; police; elections; science and technology; civil, property, and commercial laws; prosecution of graft and corruption; and even basic education. The significant additional powers given to the regions (the term “state” was avoided) are infrastructure development; economic zones; and land use and housing within the region. The list of regional powers does not even include health care and the responsibility for the region’s environment and natural resources. I assume these were reserved for the central government.

The key element in region (state) autonomy under true federalism is the power to levy taxes — the direct collection of taxes to create the dynamism within the region to propel its economic growth. This principle and intent has been much expressed earlier by federalism proponents. There were then repeated statements that the regions (states) will directly collect much of the taxes and give a share of the total region tax collections to the central government to cover its needs. Well, that did not happen.

In general, the various changes in the draft constitution could all be made under the present government structure without calling it federalism. I guess the proponents started with federalism and wanted to end with federalism even when the output is not federalism.

Insofar as taxation is concerned, nothing much has changed.

The imposition of existing national taxation in almost all of its entirety has not been brought down to the region level. The central government continues to impose the large lines of taxes, like income tax; value-added tax (quite likely, includes percentage tax); excise tax; and customs duties. Very little has been added to the sources of direct region taxation. Additional sources come from documentary stamp tax; amusements and gaming tax; vehicles tax; and a few more. These sources provide a small amount of taxes. Moreover, these additional local taxes favor the rich regions.

Double taxation is not allowed so that the regions cannot impose taxes similar to national taxes. For example, the regions cannot impose income tax or any form of sales tax.

The regions’ main source of revenue will continue to come from an allocation of total national tax collections. This allocation was increased from the present 40% IRA to 50%, which is not much. In anticipation that, the share of the poor regions will not be enough for their needs, an equalization fund of 3% of total national tax collections is to be established. But this is quite small as I will show later.