ConCom proposal: 18 federated states with powers to impose taxes

Mike Navallo, ABS-CBN News

Posted at Jul 02 2018 06:35 PM | Updated as of Jul 03 2018 03:53 AM

MANILA - The body mandated by President Rodrigo Duterte to review the 1987 Constitution proposes the creation of 18 federated regions with powers to impose taxes and generate their own revenues, its spokesperson said Monday.

A day before the consultative committee (ConCom) votes on a draft of the proposed constitution, spokesperson Ding Generoso presented to the media the suggested structure of the federal government and the distribution of powers between the federal government and the federated regions.

Under the proposal, the federal republic would be comprised of separate regions for the Bangsamoro and the Cordillera, together with the remaining 15 other administrative regions in the current set-up, and the addition of the Negrosanon federated region on the island of Negros.

“After looking at several proposals, ConCom considered the least disruptive transition. Since regions are now established, to avoid a lot of disruption, ConCom decided to stick with current regional configuration,” Generoso said.

With the exception of the Bangsamoro and Cordillera federated regions (which will have different structures and additional powers), the other 16 regions will be composed of a regional governor, a deputy regional governor, and a regional legislative assembly. 

Half of the regional legislative assembly members will be elected as representatives of component provinces, and independently-chartered or highly-urbanized cities, while the remaining half will be filled by representatives of political parties who obtain a certain number of votes during the regional elections.

Both the regional governor and deputy regional governor will be elected by the regional legislative assembly from among themselves.

All elected officials will serve a 4-year term and may run for reelection only for another term.

Both the federal government and the federated regions will have their own exclusive powers.

The federal government will have exclusive powers over matters pertaining to: 
- defense, security of land, sea and air territory; 
- foreign affairs; 
- international trade; 
- customs and tariffs; 
- citizenship, immigration and naturalization; 
- national socio-economic planning, monetary policy and federal fiscal policy; 
- competition and competition regulation bodies; 
- inter-regional infrastructure and public utilities, including telecommunications and broadband networks; 
- postal service; 
- time regulation, standards of weights and measures; 
- promotion and protection of human rights;
- basic education; 
- science and technology; 
- regulation and licensing of professions; 
- social security benefits; 
- federal crimes and justice system; 
- law and order; 
- civil, family, property and commercial laws; 
- prosecution of graft and corruption; 
- intellectual property; 
- elections.

On the other hand, federated regions have exclusive powers over:
- socio-economic development planning; 
- creation of sources of revenue; 
- financial administration and management; 
- tourism, investment and trade development; 
- infrastructure, public utilities and public works; 
- economic zones; 
- land use and housing; 
- justice system; 
- local government units; 
- business permits and licenses; 
- municipal waters; 
- indigenous peoples’ rights and welfare, culture and language development; 
- sports development; 
- parks and recreations.

All other powers not stated are considered reserved to the federal government.

“The federal government will only supervise 18 federated regions, and every region will supervise local units within its region. Hindi na ‘yung isang tatay na nag-aalaga ng 1,400 na anak. Kundi ginroup ang mga anak 20 bahay at yung 20 bahay kinakausap ng padre de pamilya,” Generoso explained.

(It won't be like a father taking care of 1,400 children. Rather, the children were grouped into 20 houses and the father talks to these houses.)

Under the draft Constitution, federated regions will be able to levy some taxes currently being imposed by the national government, without remitting any portion of the amounts collected to the federal government.

Each region will collect real property, estate, donor’s, documentary stamp, professional, franchise, games and amusement, environmental, and road users taxes, as well as fees on vehicle registration, transport franchise, and other taxes granted by federal law.

The federal government, on the other hand, may impose other taxes, duties, fees, charges and impositions not granted to federated regions.

Generoso said that an estimated P40 billion to 50 billion in taxes will directly go to the regions with the transfer of the collection of certain taxes to them. 

In addition to this amount, federated regions will also automatically get equal share from half of the estimated P2 trillion collection of income, excise, and value-added taxes as well as customs duties to be imposed by the federal government.

And to bridge the gap between poorer and richer regions, the draft constitution proposes the creation of an equalization fund equivalent to 3 percent of the annual budget in the General Appropriations Act. 

The fund will be administered by a 15-member Federal Intergovernmental Commission, who will see to it that regions who need more will get the necessary assistance.

The proposal will do away with the population and land area criteria in the distribution of the current internal revenue allotment or IRA.

“What we’re giving them is control over certain amount of money that they can allocate according to their needs,” Generoso said.

Federated regions will also be given powers to prepare their own budgets for certain services, instead of relying on a central agency. Generoso said this will cut the budgeting period from 3 years to 1 1/2 to 2 years.

ConCom members are expected to vote on the whole draft of the Constitution on Tuesday at 9:00 a.m. They hope to submit the draft to the President on or before July 9. 

Regional consultations will continue until August 19 and feedback generated will be included in the final report to be later submitted to the President, along with additional documents.