Fund distribution
THE nation’s father of federalism, Aquilino ‘Nene’ Pimentel Jr. proposes “to share the resources of all revenues, not only taxes collected by the Bureau of Internal Revenue” as follows: Federal Government 20%, 12 states 80%.
As sharing of the 80% between states on the one hand and the provinces, cities, municipalities and barangays on the other hand he proposes: 30% for the states and 70% for the smaller entities. The LGU-parts would be higher than today’s Internal Revenue Allocation (IRA).
PDP-Laban Federal Institute provides: 40% of all taxes collected shall go to the federal government and 60% to the regional government.
Cebu former governor and Third District Rep. Gwen Garcia explained that in the federal system 70 to 80 % of the total income will be retained by the federal state. Under the unitary system all public income goes to Manila and only 40% of it comes back to the provinces and the LGUs, while 60% is retained in Imperial Manila. She complains: I was so frustrated at how big our income with all our industries and yet these all go to the national government.
But Garcia must not forget that the state of Central Visayas as one of the richer states will have to give equalization funds to the less developed states until those will have caught up or reached a decent level of life quality.
What is meant by all revenues or total income? Apart from the BIR-collected income taxes there are the 12% valueadded taxes and other indirect t ax es.
There are about 200 government-owned and -controlled corporations. Nine of them remit more than P1 billion to the government revenue.
Anyway, all the revenues sum up to the P3.767 trillion of the 2018 national budget.
But under the federal system the states will collect the revenues and each state will, according to its capacity and performance, send a share to the capital to fund the federation.
In the responsibility of the federation will be the frame legislation, constitutional court, defense, peace and order, foreign policy, federationwide infrastructure, media, monetary system, repayment of foreign debt, customs, federal commissions,
ombudsman, higher education, vehicle and driving licensing, traffic rules, science and research. In the responsibility of the states will be: state legislation within the frame legislation, the state police, elementary education, culture, jurisdiction, economy and tax collection, infrastructure and development, Comelec, environmental issues, health, land classification, disaster response and pr event i on.
Of course there will be much arguing, bickering, controversy and dispute for quotas and shares but compromises have to be found. It is a political not a juristic issue. It requests maturity on the part of the politicians. A strong president is needed to come to solutions in due time.
— Erich Wannemacher, German expat, LLC