PCCi worried over shift to federalism system

The Philippine Chamber of Commerce and Industry (PCCI), the country’s largest business group, has expressed concern over the proposed shift to a federal system, citing possible misuse of allocated funds in regions.

During the PCCI’s discussions on the proposed federal government, PCCI auditor Benjamin Punongbayan said the allocation of taxes to be collected by the central government to regions could lead to misuse of funds.

“Remember, if you are allocating the taxes collected by the central government, the regions will just look at it as a dole-out and that will be misused. I tell you. It will just be misused because they don’t have accountability. Who are they accountable to?” he said.

To promote accountability, Punongbayan said the money to be spent in the region should be earned within the region.

He also said a prototype could be set up from which it can be seen if the system would work out.

In response, Arthur Aguilar, who serves as chair of the subcommittee on economic reforms for the Charter change consultative committee, said there would be a federal transition commission to be set up and to be headed by no less than the President if and when the proposal is approved.

“(The commission) will be empowered to form several clusters of functions. One is of issues related to fiscal and tax-sharing and all of your concerns are brought up there,” he said.

Based on the workshops conducted with foreign experts from Canada, Nepal, Australia, Spain, South Africa and Kenya, he said they were given advice that in the long term, the federal transition commission will have to graduate to a federal inter-government commission to be composed of high-level officials.

“Because all of them… said federalism only works if you have the inter-government mechanism,” he said.

Earlier, the PCCI along with other business groups such as the Makati Business Club, Management Association of the Philippines, Financial Executives Institute of the Philippines, Semiconductor and Electronics Industries of the Philippines Foundation Inc. and Cebu Business Club raised concern on the proposed shift to a federal government, saying such may have implications on the economy and lead to uncertainties among investors.

In their position paper, the business groups said government agencies such as the Department of Finance, Department of Budget and Management, and National Economic and Development Authority should have the opportunity to weigh in on the comprehensive economic implications of a shift to a federal system of government.