What happens to LGUs in proposed charter? (Part 1)

Former Senator

The final draft of the proposed Federal Constitution submitted to President Duterte and Congress is raising a lot of questions on the fate of local government units that shall comprise the federated regions.

What shall be the powers and obligations of provinces, cities, municipalities, and barangays? What would be the share of these LGUs in collected taxes, fees, and revenues? Who determines the share? Is fiscal autonomy of LGUs threatened? Would a new Local Government Code to thresh out these matters be enacted in support of a new charter?

Quite lamentably for the country’s local officials, the proposed charter crafted by the Consultative Committee to review the 1987 Constitution is silent on crucial matters that would have great impact on LGUs and their role in a planned shift from unitary to federal system of government, in pursuit of a more robust and balanced countryside development.

If empowering LGUs, both in fiscal and administrative aspects, is key to achieving nationwide development thru decentralized governance, how come the role and powers of local governments – which would be under the general supervision of the regional governor – are not highlighted in the draft constitution? How come the power and functions of the Federated Regions and the nature of the Regional Executive Power were given special focus while that of LGUs were left out?

It would also seem the essence of local autonomy is reduced by a change in the wording – from “ensure” to “promote” – as shown in the draft charter’s Declaration of State Policies (Article 2, Section 27) which reads: “The Federal Republic shall promote the autonomy of local government units in line with the principle of subsidiarity and in accord with federalism.” Such provision is in contrast with that of the 1987 Constitution which states: “The State shall ensure the autonomy of local governments (Art. 2, Sec. 25).”

And would revenue-raising capabilities of LGUs, to support local development and frontline delivery of basic services, be diminished or altogether removed with the provision against double taxation? Such could be the effect of the draft charter provision which reads: “The Federal Government and the Federated Regions shall ensure that taxation shall be uniform, equitable, and progressive. No double taxation shall be allowed (Art. 13, Sec. 3).”

There could also be a problem for LGUs with Art. 13, Sec. 4 of 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.”

Note that such revenues is proposed to be “equally divided” among federated regions, regardless of size and population density. Is it right for big and small regions alike to get the same amount of revenues? And there is no mention how it shall be divided among the LGUs which comprise the federated regions. To get their fair share of funds, would LGUs be at the mercy of the regional governor to whom is vested regional executive powers?

Such a matter is critical considering what has been happening to money due the LGUs all these years. 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,” they faced extreme difficulties getting what should be for them.

It would take a landmark ruling of the Supreme Court – which recently decided, in a 10-3 vote, that all national taxes should include customs duties, tariffs, fees, etc., and not just those imposed by the National Internal Revenue Code – to pave the way for LGUs to get in full their “just share” that were deprived them through the years, estimated to reach a staggering P1.5 trillion.

The provision in the 1987 Constitution had to go through a lot of haggling for it to be realized. When I was national president of both the Union of Local Authorities of the Philippines and the League of Provinces, I remember we had to plead with Malacañang for the share of LGUs to include all collected revenues. We were fortunate that then President Joseph Estrada had a soft heart for LGUs, having been a mayor himself, and he granted partially our request, resulting in about P14 billion more funds.

What I’m saying is this: Although the 1987 Constitution is very clear that local governments have a “just share” in national taxes, LGUs still faced extreme difficulties. How much more if the draft constitution does not carry any provision to deal specifically on the matter?

The draft constitution has to undergo a lot of refinements to clearly address crucial matters affecting LGUs. If a new charter has to have the overwhelming support of local officials who can do a lot to ultimately garner support of the people whose approval is necessary for a federal system to be put in place, then the collective interests of LGUs ought to be given priority, too. (To be continued)

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