Senate asked to probe economic implications of shift to federalism

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Sherwin T. Gatchalian
SENATE committee on economic affairs chairman Senator Sherwin T. Gatchalian -- SENATE PRIB

By Arjay L. Balinbin, Reporter

SENATOR Sherwin T. Gatchalian has filed a resolution urging his colleagues to look into the economic implications of the proposed shift to a federal system of government.

Filed on Aug. 7, the Senate Resolution No. 823 directs the appropriate Senate committee to conduct an inquiry, in aid of legislation, to evaluate the economic implications of a shift to a federal system of government including, but not limited to, the attendant economic risks and opportunities, the implications to regional economic growth, the additional fiscal costs of the shift to federalism, and the effects on investments due to emerging issues on the imposition of additional taxes.

Mr. Gatchalian’s resolution also seeks to evaluate the administration of incentives in a federal system and its repercussions on the ease of doing business.

In his resolution, Mr. Gatchalian noted that Socioeconomic Planning Secretary Ernesto M. Pernia has warned that “the regions in the country are not ready for the system, that the momentum of infrastructure improvement in the regions is going to be disrupted, and that the shift to federalism will entail immense expenditures, which may increase the fiscal deficit to GDP (gross domestic product) ratio….”

In a text message to reporters on Friday, Mr. Gatchalian explained that “the shift to federalism will radically alter the structure of national and local governments.”

He added that it will “create uncertainties in economy and doing business.”

Also on Friday, Presidential Spokersperson Harry L. Roque, Jr. issued a statement in response to the remarks of Consultative Committee (ConCom) member Father Ranhilio Aquino that President Rodrigo R. Duterte should fire Finance Secretary Carlos G. Dominguez III and Mr. Pernia who have recently voiced their concerns about the proposed shift to a federal government.

“We welcome the concerns of Fr. Ranhilio Aquino as a member of the Consultative Committee (ConCom) and acknowledge his passion and hard work in contributing to the drafting of the federal charter. The President, as we all know, has long been an advocate of federalism and his policy has always been one of inclusive participation of various groups and sectors,” Mr. Roque said.

He added that the Palace “views the differences of opinion on federalism as part of the continuing discourse, even among members of the President’s official family, which the Chief Executive encourages to thresh out possible contentious issues.”

For his part, Mr. Dominguez said: “As we pointed out earlier, we never stated that we are against federalism. Rather, with respect to the fiscal provisions of the proposed Constitution, there are ambiguous provisions on revenue assignment and there are no provisions on expenditure assignment. There are, likewise, principles on revenue sharing that do not appear to be well studied.”

Given the said ambiguities, he said: “it is our duty and responsibility to point these out and engage in a healthy, level-headed discussion, especially when the possible repercussions could result in dire, irreversible economic consequences. We believe that these should be set out clearly so that they adhere to the principle that ‘funds follow function and ‘funds follow program.”

As for the call of Mr. Aquino for Mr. Duterte to fire him and Mr. Pernia, the finance chief said: “We respect the opinion of Fr. Aquino, but we believe that such attitude would not enrich the level of discourse on the proposed Constitution.”