Federalism and Our March to Hell

 By Mortz C. Ortigoza

Can the proponents and advocates of federalism walk the real talk and not just empty talk their talk on the proposed federal constitution the members of the Consultative Committee (CC) members submitted last June 9 to President Rodrigo R. Duterte for his perusal before he submitted it to Congress for deliberation?

Will the Federal Constitution bring this impoverished and rambunctious country to Nirvana instead of hell as based on the poor financial capacity of the country and the downgrades it awaits with credit watchdogs?

Photo Credit: PinoyExchange.com

According to the CC, the sharing of wealth that primordially be taken from the taxes of the Filipinos and businessmen would be at least 50 percent to the Federal Government (FG) and 50 percent to the 18 Regional Federal Governments (RFG).

On the draft, the Federal Government retains the supervision of the four High tribunals’ Federal Supreme Court, Federal Constitutional Court, Federal Administrative Court, and Federal Electoral Court.

It has six constitutional bodies like the Federal Civil Service Commission, Federal Commission on Elections, Federal Commission on Audit, Federal Commission on Human Rights, Federal Ombudsman Commission, and Federal Competition Commission.

It covers too Defense like security of land, sea, and air territory; Foreign affairs; International trade; Customs and tariffs; Citizenship, immigration, and naturalization; National socioeconomic planning; Monetary policy and federal fiscal policy, banks, currency; Inter-regional infrastructure and public utilities, including telecommunications and broadband networks; Promotion and protection of human rights; Basic education; Science and technology; Regulation and licensing of professions; Social security benefits; Federal crimes and justice system; Law and order; Civil, family, property, and commercial laws, except as may otherwise be provided for in the Constitution; Prosecution of graft and corruption cases; Intellectual property; Elections and; others.

Each of the 18 Federal Regional Governments operates those Socioeconomic development planning; Creation of sources of revenue; Financial administration and management; Tourism, investment, and trade development; Infrastructure, public utilities, and public works; Economic zones; Land use and housing; Justice system; Local government units; Business permits and licenses; Municipal waters; Indigenous peoples' rights and welfare; Culture and language development; Sports development, and; Parks and recreation.

On the digested article of Rappler on the draft constitution titled “Highlights of Consultative Committee's draft constitution”, it says:

• “Regions will be led by a Regional Governor and Deputy Regional Governor elected as a team. They are to be elected by majority of the Regional Assembly from among its members. The deputy governor will serve as the assembly's presiding officer.
• Each region will have a Regional Supreme Court; Regional Appellate Court; Regional Trial Courts in component provinces, cities, and municipalities; lower courts; and special courts.

Moreover, the Federal Regional Government will be paying the constructions of the new regional executive, legislative, and judicial offices and their countless of thousands of personnel.

They would be bankrolled by the taxes collected by the region as based on the 50% distribution of revenues between FG and FRG.

The additional burden to the coffer of the new bureaucracy will be between P44 billion to P72 billion for 17 Regions (not 18 Regions) under Federalism, according to Rosario Manasan, senior research fellow of the Philippine Institute for Development Studies (PIDS).

“The amount includes the salaries of governors and vice governors of the states, senators – whose numbers would increase under a federal government, politicians' staff, and the offices' operating expenses,” she added.

It means rich regions like Metro Manila, Calabarzon, and Region 3 could easily remunerate them, paid the construction of their offices, and can even have surplus as they collect more taxes in their burgeoning areas. 
Poor regions like Zamboanga Sibuagay, Autonomous Region in Muslim Mindanao (ARMM), Eastern Visayas, and others would squirm in finding funds because of the dearth of businesses in the places where the taxes collected they use for those expenses.

Misguided Ways By the Pro-Fed That Will Bring Us to the Dogs

Is this the way to inflict more burdens to the already hapless Filipinos in these regions?

 Department of Finance Secretary Carlos Dominguez III told the senators on a budget hearing that if Federalism will be shoved to the throat of the Filipinos, this country “will go to hell” not with “will go to the dogs” as an idiom usually used by writers ha ha ha !

 What with the P120 billion deficits yearly needed by those handicapped regions to attain the physical and financial need of Federalism.

 “Tremendous, it will go to hell… everybody pays higher interest rates, 600 basis points [increase],” he told the senators in the recent hearing.

If the BIR is given the yeoman’s jobs to collect most of the P3.757 2019 proposed national budget (she is given a tax target of P2.074 trillion) for the government this year, would this sum enough to sustain the funds needed by the Federal Government, the Regional Federal Governments, and the debt service?

Who’s going to pay for the military?” Dominguez posed at the Senate.

National Defense has a proposed budget next year of P183.4 billion.

He lamented that when he saw the draft federal Constitution he found that it was silent on the national government’s multi-trillion pesos debt.

"Jesus Christ!" I quipped upon hearing this.

Next year our total public debt obligation to our creditors abroad, as provided by the Department of Budget & Management, will be almost P400 million.
 Failure to pay it entails sanctions from other countries where they will not buy our exports, freeze our wealth in their places, and blacklist the Philippine government and its people as financial borrowers.

With a deficit of P120 billion to fund those offices and personnel, our country will be obliged to borrow abroad but has to face the consequences of 6.7% inflation according to Dominguez.

Consumer prices in the Philippines were up 5.7 percent in July, the fastest inflation rate in at least five years, the Philippine Statistics Authority cited.

Our credit lines abroad will go haywire after credit watchdogs Moody’s Investors Service, Fitch Ratings and S&P Global Ratings downgrade our borrowing worthiness.

The economic manager of President Duterte said the country’s investment-grade credit ratings, which makes it cheaper for the country to borrow money, may “go to hell” while interest rates could rise by up to 6 percent under the “very confusing” fiscal provisions of the draft federal Constitution.

 Filipinos corporations that run banks and conglomerates in the country are punished to pay more interest on their debt abroad.

Many of them will forego their expansion while other will require their banking affiliates in the country to spike the interest to debtors where many would become discourage to borrow and invest the fund here.

The Federation thing becomes a nightmare as more unemployed Filipinos could not find jobs because of the lethargic number of investors who pour their monies in the country.

This profligacy called Federation will slowdown and aggravate the economy.

Without a clear solution to avoid this conundrum, the harbinger of boom like Consultative Committee member former Chief Justice Ricardo Puno, who did not know economics in his television interview, will instead bring us to doom, son of a gun!

For the meantime, we Filipinos should instead vigorously shake up our Senators who procrastinate on the revision of the Public Service Acts after the House of Representatives approved it last year.

The new PSA, the real deal, could draw more investors, generates more employment to our people where roughly 7.2 million were jobless last December 2017 (Social Weather Station) and creates more taxes to make this country “great” like Thailand, Taiwan, and Singapore that, mind you, are not Federal but unitary-parliamentary, unitary-semi presidential , and unitary-parliamentary, respectively.

So what are you talking Federalism as the silver bullet to take us off from being a pariah?

Those Asian countries economic vitality ensued not because they chopped their country into regions, just like what the pro federalism wanted it, but they use common sense, Holly Molly, to improve their business atmosphere how to induce more investors especially foreigners who are the spark plugs of their dizzying economic growth.

Many of these Regional Federal Governments can do too a 100 percent business atmosphere as come-on to investors.

But my poser: Why change the 1987 Constitution when Congress can revise the PSA and even change the present set-up of 60-40 taxes sharing as dictated by the Local Government Code in favor of the provinces, cities, and towns so they can have more monies for infrastructure build up?
As what our brothers and sisters in Mindanao clamored.

(Wait for my next column: Why resort to Federalism when Congress can amend the Local Government Code)

Federalism is not only risky but a waste of money if one’s target is to boost the economy of this country.

We have the necessary tools to do it as what I mentioned recently.

Let’s shake up our senators. Why are they delaying the PSA?

Is it because it’s election time and they need the aircraft and countless millions if not billions of pesos of these corporations that have been an oligopoly and became a fixture at the Forbes Global 2000 List of richest corporations in the world at the expense of the Filipino bloods? HesusMariaHusef!

(You can read my selected columns at http://mortzortigoza.blogspot.com and articles at Pangasinan News Aro. You can send comments too at totomortz@yahoo.com)