A MEMBER of the Consultative Committee (ConCom) tasked to amend the 1987 Constitution assured that no “fiscal nightmare” will occur under the proposed federal form of government.
In a statement, ConCom spokesperson Ding Generoso assured that fiscal administration is “quite clear” in the draft federal constitution with both federal and regional governments getting an equal share of the country’s top four sources of revenue.
Generoso issued the statement after hearing Finance Secretary Carlos Dominguez say that the proposed federal system could become a nightmare for the country, particularly in the fiscal policy side.
A local treasurer, however, believed that bigger local government units with thriving economies have an advantage once the new form of government will be implemented.
Genoroso said that even with the new set up, the federal or central government still retains its power to ask for taxes, except for selected taxes and fees wherein collections will be transferred to the regional governments.
At least P2 trillion worth of taxes, including those collected within the regional level, were collected by the National Government last year. This includes individual and corporate income tax, excise tax, value-added tax and customs duties.
Generoso said that sharing of collections from these sources shall be 50 percent for the federal government and 50 percent for the regional governments.
He said that at least P1 trillion will go to the regional governments.
According to Generoso, the federal government will also no longer be in charge in the distribution of the Iternal Revenue Allotment (IRA) as this will be given to regional governments.
“The corresponding amount is part of the P1 trillion that correspond to the 50 percent share of the regions in the top four revenue sources,” he said.
According to him, the federal government will only be concerned in the payment of debt service, national defense and foreign affairs, whose budgets will be untouched and intact under the draft charter.
But while the proposed federal constitution could be beneficial for the bigger LGUs, a local treasurer is concerned that small ones may not get a bigger IRA.
Talisay City treasurer Emma Macuto told SunStar Cebu that highly urbanized and even component cities may no longer depend on IRA if they have thriving economies.
“Kung gamay ra ang IRA share, mukugi man sad ang LGU sa pagkolekta sa buwis gikan sa ilang revenue sources, mao nang maka-sugakod ra sila,” Macuto said.
But for IRA-dependent LGUs with less economic activity, she believes they will have difficulty in the implementation of the new system. (JKV)