Pimentel Bill: Fiscal equalization and the “Bigger Pie, Bigger Slice”

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By Dr. Bob Ocio

Isyo ug Servicio

Sunday, January 19, 2014


FISCAL equalization is a concept of fiscal management in Australia where the federal government manages to identify areas in the different states who need to be additionally funded so that they may be able to achieve the same level of development and enjoy basic services equitably available in the other parts the country.

The "Bigger Pie, Bigger Slice” bill is a term coined by Senator Koko Pimentel which pursues the legislative agenda of former Senator Aquilino Pimentel Jr. to increase the share of the local governments from the revenues collected by the government. These and all, including the agenda to pursue a Federal system of government is meant for the democratization of power, resources and development in all regions and local governments in the country.

Our government has centralized power and funding such that democracy is threatened with too much centralization of decision making and development in Manila. As such, even if Mindanao produces a bigger contribution to the Gross National Product, it is left out in terms of infrastructure and development.

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No wonder, people flock to the big cities in Metro Manila to find jobs. How do we reverse that trend? The answer is fiscal equalization where the slice of the national funds be equitably distributed to the regions. Thus, the proposal of Senator Koko to provide a better slice of the revenues earned and turned over by the local governments to the national government. This way too, local leaders do not go a long way to ask the President and national agencies to provide funds for national projects. That is why too, the PDP-Laban proposed for a true Federal government where the regions will have equitable representations in the Senate and in the management of their own resources and order.

Former Senator Aquilino Pimentel Jr. through the government of Australia lead a group invited to attend a Conference on Fiscal equalization sometime in the late 90's. Koko and myself were with that group. I also remember how Koko would humble himself taking the economy class being an ordinary citizen while our group composed of public officials was taking the business class paid for by the Australian government.

The ‘Bigger Pie, Bigger Slice’ bill authored by Senator Koko Pimentel "will increase the shares and expand the base of what will be now known as the Shares in National Taxes (SNT) of local government units (LGUs) that covers collections of all national taxes. It aims to fully and faithfully comply with the salutary aim and vision of the Constitution to sufficiently empower LGUs by granting them a just share in all forms of national taxes and not just the national internal revenue taxes collected by the government. Further, it will amend pertinent provisions of the law to include collections made by the Bureau of Customs (BOC) on customs duties, value-added tax (VAT) and excise taxes on imported goods in addition to all national internal revenue taxes collected by the Bureau of Internal Revenue (BIR). The allocation of IRAs is enshrined in the Constitution and mandated by Republic Act No. 7160, otherwise known as the Local Government Code of 1991."

Published in the Sun.Star Cagayan de Oro newspaper on January 20, 2014.

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