A federal Philippines (III)

ACHANGEOVER to a federal system will inevitably have deep implications on the current administrative setup, allocation of national income, and realignment of power and responsibility between and among national agencies and local agencies. This is why an immediate shift to a federal system may neither be affordable nor sustainable.

It may not be affordable because many of the existing regions cannot afford to shoulder the costs of maintaining a state government. A state government will have to pay the salaries of state employees, and pay the maintenance costs of local roads, bridges, ports and other infrastructure. They will have to operate their own schools, hospitals, pensions, police forces, judicial courts, and legislatures.

In 2016, Dr. Milwida Guevara, former finance undersecretary and CEO of Synergeia Foundation, calculated that the total cost of financing a federal setup in the Philippines is roughly P2.4 trillion. This expenditure will be shared by the state and federal government. Assuming the current 13 administrative regions will be the 13 federal states, they will pay 11.18 trillion and the federal government, 11.22 trillion. Each state will shoulder 190.79 billion.

None of the 13 putative states — except three — have the capacity to raise that money. Per Dr. Guevara’s calculations, only three regions have the adequate taxable capacity — the ability of individuals and businesses to pay their taxes — to be financially viable. These are the National Capital Region (NCR) with a taxable capacity of P468 billion; Central Luzon (Region III) with P114.8 billion; and Calabarzon (Region IVA) with 1201.5 billion.

The shift to federalism would need long and deep discussions about taxation, especially about how current national taxes will be collected and shared. Clearly, there will be tight-rope walking to strike a balance, where the national government and the 13 local governments get their fair share of taxes.

Apart from the affordability issue, an abrupt shift to federalism may become unsustainable. The skills and training, the experience and orientation of the local bureaucracy are quite a whole world of difference under a multi-level government.

This is not to say that there aren’t enough dynamic and flexible personnel in the local bureaucracy across the Philippines. But all of them have been trained and molded through the years under a unitary form of government.

In most — if not all — federal states like the US, Canada, Brazil, India, or Malaysia, the local governments already existed as fully autonomous and independent states before the shift to federalism. This suggests that local political leaders and career public servants have honed their skills according to the demands of self-rule and statehood.

If the Philippines shifts to federalism today, it would be unlike any in history. State officials will have to learn completely new competencies, and acquire new skills sets.

Should we drop the idea of federalism? Not necessarily. But an immediate and abrupt shift to federalism may end up bringing more harm than good. Instead, there must be a transition arrangement of progressive devolution and a parallel intensive public information campaign to enlighten and educate the public on the nature and requirements of federalism.