Why federalism won’t be enticing to LGUs

  • Written by Angelo Tugado
  • Published in Opinion
  • Read: 234


With Mocha Uson’s “Pepedederalismo” video igniting outrage and the country’s economic managers wary of the proposed Federal Constitution, the pursuit of federalism is now more difficult, especially so with the draft charter raising many questions about local government units comprising federated regions.

To get their share of funds, would provinces, cities, municipalities, and barangays be at the mercy of the regional governor who shall be vested with regional executive powers? Would LGUs’ fiscal autonomy be jeopardized? What exactly would be their share in collected taxes, fees, and revenues? And who, or what, determines the share of LGUs?

The final draft of the proposed charter crafted by the Consultative Committee to review the 1987 Constitution is silent on many crucial matters affecting LGUs, and local officials are wondering why it is so. How come special attention was given to the power and functions of the Federated Regions while those of the LGUs within the regions were obviously left out?

It seems the revenue-raising capacity of LGUs and the sharing of taxes – the lifeblood of LGUs for them to be effective in delivery of services to the people – would be diminished with a provision in the draft charter (Article 13, Section 3) against double taxation.

Also questionable is Sec. 4 of the same Art. 13 in the draft constitution which reads: “The Federated Regions shall be given a share of not less than fifty percent (50%) of all the collected income taxes, excise taxes, value-added tax, and customs duties, which shall be equally divided among them and automatically released.” Is it right for revenues to be “equally divided” among federated regions regardless of size and population density? Should big and small regions alike be really entitled to the same amount of revenues?

And very disturbing is the fact that there is no mention how such revenues to be equally divided among federated regions would in turn be divided among the LGUs within such regions. The matter is very crucial amid the reality that LGUs have been experiencing extreme difficulties getting their money despite the 1987 Constitution (Art. 10, Sec. 6) unequivocally mandating in favor of LGUs a “just share, as determined by law, in the national taxes which shall be automatically released to them.”

It took a landmark ruling of the Supreme Court – which recently decided that all national taxes should include customs duties, tariffs, fees, etc., and not just those imposed by the National Internal Revenue Code – to make it crystal clear what consisted the LGUs’ “just share” that had been deprived from them all these years, estimated to total about P1.5 trillion.

Although the 1987 Constitution is already very clear on the share of LGUs in national taxes, they still encountered hardships in getting their funds. So how much more difficulties are in store for them with the absence of any specific provision on the matter in the draft charter?

If indeed empowering LGUs in fiscal and administrative aspects is the key to achieving national development through decentralized governance, it’s a great wonder why the role and powers of local governments that shall comprise the federated regions are not mentioned in the draft constitution.

The omission is very obvious when compared to the 1987 Constitution which provides (Sec. 5, Art. 10): “Each local government unit shall have the power to create its own sources of revenues and to levy taxes, fees, and charges subject to such guidelines and limitations as the Congress may provide, consistent with the basic policy of local autonomy. Such taxes, fees, and charges shall accrue exclusively to the local governments.”

The 1987 Constitution also has a provision (Section 3, Article 10) to establish a “local government code which shall provide for a more responsive and accountable local government structure instituted through a system of decentralization… allocate among the different local government units their powers, responsibilities, and resources, and provide for… all other matters relating to the organization and operation of the local units.”

Such provision has led to the enactment of the 1991 Local Government Code which strengthened and greatly benefits LGUs. But with the draft charter, there’s no such provision.

If the campaign for federalism is to be successful, LGUs need to help in seeking the support of the people. Needless to say, the proposed Federal Constitution must be enticing to LGUs for them to help at all in the campaign.

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