ALLIES of President Duterte in the House of Representatives led by House Speaker Pantaleon Alvarez are relentless in their quest to please the President by making the President’s dream of establishing a federal system of government come true, and of course, we need not mention the possible benefits they will gain with this change of the system of government.
Meanwhile, the President’s men in the executive branch are also very busy, losing no time in justifying and highlighting the supposedly positive effects of this shift to the country.
Federalism is basically a system of government where the country will be divided into smaller subdivision called “States”. These small states will be governed by a state/regional government. This supposedly would bring the government nearer to the people. Therefore, the programs and projects that will be identified by the regional government which will be more specific based on the distinct characteristics of the population, geography and culture of that state.
The income of the state will come from the majority of taxes and other government fees that will be collected from firms and individuals within their jurisdiction. Only small portion of the collections will go to the central government. On the other hand, the government expenditures that they will be incurring for the programs and projects by the state government will be funded ideally by the regional income.
The scenario is very ideal, isn’t it? The way how Federalism was explained above is when the system of government has already stabilized from its implementation and has gone past the infancy stage. Countries that follow the Federal system of government include the United States of America, Canada, Australia, China, The Russian Federation, Belgium, Brazil and India. With the exception of Brazil and India, all the others belong to the Group of 20 (G20) biggest economies in the world.
Does this mean that if we shift to the federal system, there is a possibility that our country may prosper and be among the biggest economies?
YES and NO. Actually, the shift really does not assure economic growth or prosperity. It may just be a coincidence that these countries are among the wealthiest, and it has really been established whether there is a correlation between the system of government and economic growth. So, if we’re just looking at the possibility, then, yes, there is a possibility that our country will prosper as a result of the shift, but there may also be a lean possibility for prosperity. Besides, the countries mentioned above have been federalist for a long time already.
The implementation stage is the most difficult. Some use the term, “birth pains”. It will really distort the otherwise smooth sailing government system, not to mention the economy, as well. Earlier this week, Sec. Pernia, a well-educated economist and highly-respected professor, declared that shifting to Federalism will affect the national budget and the country’s economy. Only to be disputed by a human rights lawyer turned Duterte a.k.a. human-rights-violator-par-excellence apologist, Presidential Spokesman Harry Roque, who, in fairness, holds a double major in economics and political science in his undergrad, saying that Federalism will not harm the budget and the economy. I could only sigh under my breath one of Jesus’ last words in exasperation, “Forgive them (includes all of Digong’s allies) Father, for they know not what they are doing!”
Roque oversimplifies it in such a way that he is saying that the budget will not be affected because the Internal Revenue Allotment (IRA), the source of funds of the local government, which is their share of the local government units (LGUs) in the revenues of their respective provinces, cities or municipalities, will be redirected to the LGUs instead, at least for the beginning stages. Eventually, each of the 18 states that will be created will become self-sufficient.
Sec. Pernia says that Federalism will “wreak havoc” on our economy.
Rising inflation rates, depreciation of the currency and higher interest rates, not to mention the high government spending on infrastructure projects due to the Build! Build! Build! Program, is already pushing our economy to its limits. Digong even describes the economy to be in the doldrums. The NEDA chief mentions about hyperinflation as a possible consequence of Digong’s well-thought off political agenda. Hyperinflation is simply defined as very high inflation.
The government will definitely spend a lot when the country shifts to Federalism, where new government agencies and entities are needed to be established, like 4 courts, 18 legislative assemblies, 6 constitutional commissions. These will need funding. Also, before all these happens, a plebiscite is necessary which, again, should be funded. This will result to a rapid increase in the money supply in the economy as there is a need for fiscal (BIR) and monetary (BSP) authorities to suffice the government spending. BIR would have to think of new ways to boost government funds.
This means that taxes will increase AGAIN. The BSP, on the other hand, will print new money. When these happen, prices of goods and services will rapidly rise as well, far exceeding the present levels of inflation.
There are many advantages of Federalism, but at present, the disadvantages outweigh them. I am not saying that I don’t want Federalism. What I am saying is that this is not the right time. The administration should take more time and not rush this agenda. You should prioritize the welfare of the whole country before any of your (selfish) agenda.