By Karen Galarpe, August 11 2018; GMA Network Online


Image Credit to ABS-CBN News

Presidential spokesperson Harry Roque on Saturday said Malacañang is all for having a healthy discussion on the proposed federal charter.

“As we have said, we encourage a healthy discussion regarding the draft federal Constitution,” Roque said, in response to the statement of Finance Secretary Carlos Dominguez on Friday that the ambiguous and unclear provisions in the proposed draft charter “could result in dire, irreversible economic consequences.”

“The opinion of the President’s economic managers is one of the myriad voices that would contribute to a higher level of discourse on the proposed federal charter,” Roque said.

Dominguez clarified that he and the economic managers never stated they were against federalism.

“Rather, with respect to the fiscal provisions of the proposed Constitution, there are ambiguous provisions on revenue assignment and there are no provisions on expenditure assignment,” the Finance chief said.

Dominguez also said the principles of revenue sharing stated in the draft charter need to be studied further.

He said that while the draft charter contains provisions on the taxation powers of the federal government and the federated region and a provision on revenue assignment in which the federated regions shall be given a 50 percent share in income, excise, value added taxes and customs duties, “there is no provision on expenditure assignment.”

“We do not want the revenue assignment and the expenditure assignment to be misunderstood, as what happened in the recent case involving the Internal Revenue Allotment of the local government units,” Dominguez said.

He also said that based on the fiscal provisions of the draft federal charter, the federal government would incur a deficit of 6.7 percent, which may result to a credit rating downgrade for the Philippines, which in turn will lead to higher interest rates.

Dominguez said “the federal government will have to cut its expenditure program by P560 billion” to avoid this negative economic consequence and maintain the current deficit target of 3 percent.

“This means the national government may have to lay off 95 percent of its employees, or reduce the funds for the ‘Build Build Build’ program by 70 percent, or a combination of both,” he said. —KG, GMA News