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Filipino federalism.

The two most pressing topics of discussion-the shift to federalism and the inflation rate-are dangerous swamps of misinformation that you venture into at your own risk.

Andres de Urdaneta had an easier time discovering the sea route from Manila to Mexico than making it through the Makati mud to the Pasig River. The local environment often bogs us down when we try to seek out the truth, and that currently describes both federalism and inflation.

For the moment, it looks like those charged with figuring out how to bring the notion of a federal system of government to the Philippines started with a blank piece of paper. Then they started a game of 'let's pretend.' Unfortunately, after at least 500 years of 'modern' government from the tribal level, the Philippines is not a blank piece of paper.

Virtually all nations that are 'federal' in form are the result of existing 'states' being combined together under a national government. For example, the Federation of Malaysia is made up of 11 states, each of which had been self-ruled for centuries. The 'Federal Republic of Germany' includes the 'Free State of Bavaria,' which was a duchy as early as the sixth century.

Even the Federative Republic of Brazil was created from the colonial divisions by Portugal into the Captaincies of Brazil, which were self-governing until joined into the United Kingdom of Portugal, Brazil and the Algarves in 1815. So is the federal United States of America, states that joined together that had a history of an independent government infrastructure.

The point is that existing 'federal governments' were created taking a number of 'independent states' and putting them together under a national government. What is being done in the Philippines is like taking a hammer to a block of ice, breaking it into a number of independent pieces. If the Autonomous Region in Muslim Mindanao, 'broken' away from the national government in 1989, is any example, after decades the ARMM is still dependent on the national government for its operating revenues.

Then you read that there will be an 'equalization fund' that is 'distributed based on each region's needs with priority to regions that require support to achieve financial viability and economic sustainability.' Further, 'The Federal Congress may also provide additional finances from the national budget to effectively and efficiently deliver government services.' It sounds like 'Imperial Manila' is maybe only going to have a name change to 'Federal Manila.'

However, a federal system could have national economic benefits if officials in the federal regions get smart and decide to serve the people and if the national government stays out of the way. Those are big 'Ifs.'

Theoretically, the regions would compete with one another to attract economic opportunities, like providing local incentives for businesses to move in. Companies and people are leaving the US states of California and Illinois because of high taxes and over-regulation, to states like Texas that are more economically friendly. That could happen here. But the poorer far-flung regions are still going to have a hard time going up against the large Metro areas. Yet, it could work if the regions take advantage of their new independence.

There seems to be a proper and even generous revenue-sharing scheme between the national and regional governments. Fifty percent of 'total taxes' including income, value-added tax, Excise and Customs duties are supposed to be shared with the regions equally. This could definitely be a windfall and beneficial game changer for the poorer areas of the country.

This revenue sharing will put more fiscal and ethical responsibility on the regional officials. It is going to be up to the people to make sure that this money goes for the greater good and not for larger corrupt bank accounts.
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Publication:Business Mirror (Makati City, Philippines)
Geographic Code:9PHIL
Date:Jul 11, 2018
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