18 federal regions may force LGUs to go bankrupt – senator
Local government units (LGUs) may go bankrupt should the country adopt the Consultative Committee's (Con-Com) proposal to have 18 federal regions under the new system of government.
Senate Majority Leader Juan Miguel Zubiri issued the warning as he questioned how the proposed federal regions would be able to generate enough income to distribute to their constituents.
Since resources and projects of the national government would be devolved to the federal regions under the proposed federal system of government, Zubiri said the federal states should be able to raise
enough funds to distribute to each of its provinces, cities, and municipalities through their internal revenue allotment (IRA).
“I am a federalist but with all due respect to the Con-Com members, I am not in favor of a regional federal setup. It fragments the whole country into 18 federal states, but then (how about) the question of income?” Zubiri asked in a press briefing Wednesday.
Echoing concerns of Senate President Pro-Tempore Ralph Recto, Zubiri said several federal states may not survive with the country's current state.
Zubiri said the annual IRA for each region reaches an average of 130 billion to 140 billion, and he doubts that the federal states could generate such amount.
“Can the region earn 130 [billion] to 140 billion to give the IRA for their survival of basic services? Has anybody thought of that?” he asked.
“Can the federal state be able to afford the IRA? One fundamental question, mukhang bugbog na ito (and this might be knocked out). Can the federal states earn enough income to pay the IRA for each and every city, province, municipality? Kasi if kalahati lang natanggap nila (federal region), kalahati lang matatanggap ng cities, provinces, municipalities. Payag ba ang leadership nila dito? How are these going to survive economically?” he asked.
On top the IRA, federal states should also be able to pay for government employees, such as social workers, within their jurisdiction, Zubiri said allocations could reach
11.5 trillion. “If [federal region] fail, local government units will go bankrupt. They will avail (themselves) of loans for sure. Without funds, how can they promote social services, education? They might not even afford to build school buildings,” Zubiri said in Filipino.
Zubiri said he would agree to the transition to a federal system if the country would only have four federal states. He said this way, federalism is “doable.”
“If they make it four federal states – Luzon, Visayas, Mindanao, Bangsamoro – papayag ako (I will agree with it),” he said.
Zubiri appealed anew that the ConCom draft should be studied and government's planned shift to federalism should not be rushed.
“If we come up with a failed experiment, then we’'ll come up with a disastrous result. We have to think this over,” he said.
“The way it is crafted now under the Con-Com is something that we have to further study and lengthily discuss,” he added.
Earlier, National Economic and Development Authority (NEDA) Director-General and Secretary Ernesto Pernia raised concern that regions are not yet ready for the federal system of government. He said federalism could disrupt the government's infrastructure projects and “wreak havoc” on the country’s fiscal situation.
“Expenditure will be immense if we go to federalism, and we estimate that the fiscal deficit to the GDP (gross domestic product) ratio can easily jump to maybe six percent or more, and that’s really going to wreak havoc in terms of our fiscal situation,” Pernia said.
No negative effect
But Presidential spokesperson Harry Roque said that despite these concerns, the proposed shift to a federal government will not have a negative effect to the economy.
“The shift to federalism, we reiterate, would have no adverse effect on the Philippine economy,” Roque said.
“Our budget would remain the same, as identified national projects would be devolved and transferred to the internal revenue allotment (IRA) of local government units,” he added,
Federal gov’t to cost 155 B
Earlier, Dr. Rosario Manasan of the Philippine Institute of Development Studies (PIDS) told the Senate Constitutional Amendments and Revision of Codes Committee that the creation of a federal government is estimated to cost 155 billion and would mean more taxes from Filipino citizens. (With reports from Argyll B. Geducos and Mario B. Casayuran)