Business leaders tackle federalism in forum

By Arjay L. Balinbin, Reporter
BUSINESSMEN on Tuesday raised concerns on the proposed shift to a federal form of government and the tax system under the draft Charter crafted by the Consultative Committee (ConCom) to Review the 1987 Constitution.
Retired chief justice and ConCom head Reynato S. Puno, at a forum in Makati on Tuesday morning, Aug. 28, addressed members of the Management Association of the Philippines (MAP) on the draft constitution for federalism.
In his speech, Mr. Puno stressed that federalism is the practical solution to the country’s “century-old poverty.”
“There may be other solutions to our problems… But certainly, the solution is not the status quo that has continuously cultivated a culture of dependence, a culture of mendicancy in our regions, a culture that continues to impoverish our regions,” he said in part.
The forum panelists were Pepsi-Cola Products Philippines, Inc. independent director Rafael M. Alunan, P&A Grant Thornton chairman and CEO and Finex president Maria Victoria C. Españo, Banco Mexico, Inc. president Victor Y. Lim, Jr., Association of Credit Rating Agencies in Asia secretary-general Santiago F. Dumlao, Jr., Lazaro Bernardo Tiu & Associates managing director Romeo L. Bernardo, and MAP National Issues Committee chairman Eduardo H. Yap as moderator.
Mr. Dumlao questioned the timing of the proposed shift to a federal setup. “Some are saying that we need to understand more the federalism concept that we propose and let us not rush, and that we should wait for the Bangsamoro [Organic] Law to be implemented and see how we can learn out of this similarly federalism approach,” he said.
For his part, Mr. Puno said: “Let us look at the pressing problems of the country. The continuing revolution in the countryside, the continuing threat of terrorism, not just by the MILF (Moro Islamic Liberation Front) but also by the MNLF (Moro National Liberation Front) and other Muslims factions, and the widespread poverty in our country. You are now saying that we now have this Bangsamoro Law. But there’s no assurance that the Bangsamoro Law will be a successful experiment.”
He added that if “we are giving the demands” of the Bangsamoro people, “why should we not give the demands of our regions to minimize our problem on poverty?”
“If I discuss federalism with our poor people, the ultimate question being asked is: ‘What material benefit will I get under federalism?’ In your case, given your superior status in our society, I hope you will not ask that [same] question; rather, I hope that you remember the words of a wise man: ‘I am because we are.’”
For her part, Ms. Españo’s question focused on how the government can ensure that local and national tax systems are harmonized and guarantee that “each region will not define its own tax which may result in double taxation.” She noted as well concerns among businesses on the “consistency of laws and the preservation of the sanctity of contracts” under federalism.
In response, Mr. Puno said: “Tomorrow, we shall be meeting with the [President’s] economic managers, (Finance Secretary) Sonny (G.) Dominguez III, (Socioeconomic Planning Secretary Ernesto M.) Pernia, and others.”
“I am confident that we shall be able to find the correct fiscal formula….I am suggesting, perhaps, we can go forward if there will be a….flexible fiscal formula,” Mr. Puno also said.
A flexible fiscal formula, according to Mr. Puno, “will be determined by an intergovernmental council, which is composed of representatives from the executive, from the legislature, and from the council of the governors.”
He said the flexible fiscal formula he is suggesting “is flexible in the sense that the formula can be reviewed and the council can tilt it in favor of the federal government.”
“I am confident that the lack of agreement with respect to the fiscal formula can be subject to compromise,” Mr. Puno added.
Sought for comment, Mr. Yap said Mr. Puno “presented a strong case” in favor of federalism.
“At the end of the day, it will depend on Congress,” Mr. Yap added, regarding whether Charter change will push through.
“As Justice Puno said, abolishing the political dynasty is key to him. Now, in our assessment, it looks like the political dynasties are very much well-entrenched in Congress. So, the likelihood of that happening is dim,” he also said.
Mr. Yap said MAP will be conducting another forum on federalism on Sept. 11. “The next forum that we are going to have will be on the contra-arguments….So, this is very serious and we want to learn more. At this point, if you ask me, it’s premature to render an opinion. This is a very complex issue, very fundamental and transformational. We need to listen and learn more.”