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MANILA - Businessmen are worried that a shift to a federal form of government may result in a bigger bureaucracy and a more complicated tax system, a former finance minister and current co-chair of the Makati Business Club said on Monday.

Roberto de Ocampo said proposals to shift to federalism need to be studied very carefully and should not be done in haste.

De Ocampo, who headed the finance department during the term of President Fidel Ramos, said a "draconian shift" in governance might end up stalling the economy.

"We're trying to caution (against) a jump into federalism because among others it would appear it would result in an even more expanded bureaucracy," de Ocampo said in an interview with ANC's Market Edge.

There are proposals for each federal state to have its own senate and other branches of government. These federal states would need to finance these new government positions, but it wasn't clear how this was going to be done, de Ocampo said.

Another worry is that federal states may impose their own taxes on top of national taxes, which would take away the gains from recent reforms aimed at simplifying taxation.

"Right now there is almost a one stop method of taxing business, which of course allows for much less bureaucracy and a much clearer taxation method," he said.