2018News

Estimates on federal shift bloated — Con-com

By Bernadette D. Nicolas, August 31 2018; Business Mirror

https://businessmirror.com.ph/estimates-on-federal-shift-bloated-con-com/

Image Credit to CNN Philippines

MEMBERS of the Consultative Committee (Con-com) are disputing the estimates presented on the cost of the federalism shift by the National Economic and Development Authority, describing the figures as “bloated.”

According to Con-com’s presentation during the meeting, the estimated total incremental cost directly attributed to federalism features would only amount to P13.29 billion, way below what was presented by the Neda—estimates as low as P156 billion to as high as P243 billion.  The figure presented by Neda in their meeting on Wednesday with the Economic Development Cluster is an annual recurring expense, Con-com said.

The “different” estimates notwithstanding, Con-com said they are still “willing to reconcile” their position with the figures of other agencies.

“We would like to know because they are the experts. We would like to know if there are many things that they see that we don’t see,” Con-com member Arthur Aguilar said.

For his part, Con-com chair and retired Chief Justice Reynato S. Puno told the BusinessMirror they also asked for time to respond in writing to the areas of concern on the draft Charter raised during the meeting.

Asked about the purpose of the meeting, Puno said, “Before Congress examines the draft, at least the Executive branch is united with respect to the fiscal formula.”

The Wednesday meeting was presided by Finance Secretary Carlos G. Dominguez III.

Aside from Puno and Aguilar, Con-com members Edmund Tayao, Atty. Susan Ubalde-Ordinario, as well as Socioeconomic Planning Secretary Ernesto M. Pernia, Neda Undersecretary for Policy and Planning Rosemarie G. Edillon and Budget undersecretary Laura B. Pascua were among those who attended.

Sought for clarification, Aguilar said the figures they computed on the cost were based on 2018 General Appropriations Act.

The components of the total estimated incremental cost included the following: Senate with 12 new senators (P2.9 billion); House of Representatives with 108 new lawmakers (P4.06 billion); Regional Assembly with 450 new Regional Assemblymen (P1.08 billion); Additional budget for Federated Region for Personal Services and Maintenance and Other Operating Expenses, which is on top of Regional Director or Staff Budget for 18 Federated Regions (less Bangsamoro) (P3.4 billion); Capital Expenditures and Contingency Fund for 18 Federated Regions (less Bangsamoro) (P850 million); and Federal Intergovernmental Commission (P1 billion).

Con-com also noted that the computation does not factor in savings from the rationalization of the national bureaucracy.

The Committee also expects more savings than expenditures in the long run.

The proposed sharing of total government revenues is two thirds for the Federal Government and one third for Federated Regions.

Based on 2017 data, total Federal Government funds will amount to P2.2 trillion while the total for Federated Regions is P1.1 trillion.

The Con-com’s draft also said the federated regions will have a share of not less than 50 percent of all collected income taxes, excise taxes, value-added taxes and customs duties—the top revenue sources of the central government. The other 50 percent will go to the federal government.

The Con-com is also proposing that the federated regions collect and levy the following taxes: real property tax; estate tax; donor’s tax; documentary stamp tax; professional tax; franchise tax; games and amusement tax; environmental tax, pollution tax and similar taxes; road users tax; vehicle registration fees; transport franchise fees; and local taxes and other taxes which may be granted by federal law.

Con-com said there will be “no drastic change” after ratification, since the transition will be carried out in phases with hardly any disruption in the economy and fiscal administration.

The Transition Plan, the Con-com said, should seize the opportunity for the two levels of government to practice zero-based budgeting and right sizing in designing organizations, staffing patterns and plantilla positions.

 

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