Economic cluster to discuss federalism this week

Published August 26, 2018, 12:00 AM

by manilabulletin_admin

By Chino S. Leyco

The Duterte administration’s economic cluster is scheduled to meet this week to discuss the draft federal Constitution and possibly come up with unified assumptions on the effects once the country shifts to a new form of government.

Socioeconomic Planning Undersecretary Rosemarie G. Edillon said the economic team along with the Office of the Executive Secretary will formally discuss on Wednesday the draft federal Constitution endorsed by President Rodrigo R. Duterte.

Edillon, meanwhile, said that she was unaware whether the members of the Consultative Committee (Con-Com) who crafted the draft Constitution will take part during the economic cluster’s meeting.
Retired Chief Justice and Con-Com Chair Reynato Puno earlier said they will sit down this week with President Duterte’s economic managers to hammer out a compromise on the contentious revenue sharing provision under the draft Constitution.

“The federalism will be presented by me before the economic cluster, I don’t know if the Con-Com is invited, I’m not sure, but the Office of the Executive Secretary is invited,” Edillon told reporters in an interview last Friday.

Economic cluster members, which include the National Economic and Development Authority (NEDA), the Department of Budget and Management (DBM) as well as the Department of Finance (DOF), have different assumptions on the potential economic impact of the draft.

“That’s the reason why we’re meeting on the 29th, but I have not seen their positions,” the NEDA official said, adding they hope the cluster could have a unified assessment after their meeting on Wednesday.

But Edillon said the economic cluster will defer to the DBM when it comes to the final assumption as chair of the inter-agency Development Budget Coordination Committee (DBCC).

“In our paper, we already put there that we defer to the DBM as the final authority when it comes to numbers and assumptions. What we can do is to inform them about our assumptions, in fact our assumptions are conservative,” the NEDA official said.

Aside from federalism, Edillon said the economic cluster will also discuss updates on the rice tariffication bill and may also talk about the long-delayed 11th Foreign Investment Negative List (FINL), which has been submitted to Malacanang.

Earlier, the DOF said the draft federal Constitution, if adopted and implemented beginning next year, will require more than a trillion pesos in additional expenditures for the government until 2022.

Based on a DOF document, a hefty P1.651 trillion is needed to comply with the draft federal charter’s 50:50 revenue sharing scheme, which will be given in a form of internal revenue allotment (IRA) to the federated regions.

Under the proposed charter, the federal government shall give the federated regions a 50 percent share in income, excise, value added taxes and customs duties collected by the Bureau of Internal Revenue and the Bureau of Customs.

According to the DOF computation, the national government, or the federal, will require additional P342 billion next year under the draft Constitution, this amount would increase further in 2020 to P389 billion, and another P424 billion the following year.

The needed additional spending requirement will continue to rise to P496 billion by the time President Rodrigo R. Duterte’s term ends in 2022.

Considering the hefty cost under the draft Constitution, Finance Secretary Carlos G. Dominguez III has already sought for dialogues with the proponents of the federated government.

Dominguez also briefed President Duterte about the risks if they now shift to a federal form of government, noting that after their discussion, the chief executive “now has a good appreciation of this draft’s fiscal implications.”

Dominguez reiterated that the Duterte administration’s economic team is not against federalism, but he maintained that the draft Constitution needs further discussions as it has “dire, irreversible economic consequences.”