201477664 March 20, 2018

PM 135
Federalism in the Philippines
The Philippines that most Filipinos have known for the longest time is the unitary form
of government. In this form of government, the central government controls the whole state
with the central government choosing which powers to delegate in its different divisions. But
with the impending push of lawmakers for a federal form of government, this long known
way of managing the country will change.
In a federal form of government, the whole country is made up of different states.
(Encyclopedia Britannica, 2017) Unlike in a unitary form of government, power in a federal
form of government is divided between the national government and other governmental
units; (Cliff Notes, 2016) these local state governments however are still connected to each
other by the national government. Compared to the Philippines’ current form of government,
in a federal form of government, local state governments are given more powers and must
maintain the management of each local state government by generating their own resources
and would not rely much on monetary assistance from the central government.
One of the major reason why lawmakers claim that the Philippines needs this
transition to a federal form of government is because of the “imperial” status of Manila. It
has been said that because of the concentration economic and political power in Manila, it
has led to the unequal distribution of growth in the Philippines. (Punongbayan, 2018). House
Speaker Alvarez mentioned that poor regions will be grouped with prosperous ones and that
states would no longer need the Internal Revenue Allotment (IRA) for they would have access
to the 80% to the 85% of the income they have generated locally. (Alvarez, 2018)
Another reason as to why there is a strong push for federalism is that according to its
advocates, it is one way of giving the power back to the people. It cuts down the power of the
president by redistributing the power, resources and appointments and other aspects in
which the Office of the President has great control of. Instead of the Malacañang Palace
controlling the resources and positions of regional and national offices, federalism cuts down
the number of officials and staff appointed by the president. (Saludo, 2018) With regional
leaders and officials being localized because of the lesser influence of the national
government and are mostly in position because of the will of the people they govern, officials
are more involved over their constituents’ lives. The regional offices could easily allocate
funds to be spent for their area, provide services for their people, and develop infrastructures
for schooling, law enforcement, healthcare, roads and bridges, and mass housing.
Currently, in administering the funds of the public, the central government budgets as
to how much should be allocated to its different offices and units. These budgets show which
programs are given by the government much importance and which projects are not a
priority. The amount to be given per office or government unit is obtained from the revenue
collection or the taxes of the country’s people. However, when the Philippines shifts to a
federal form of government, most of the people’s taxes will be directed towards their own
states. Its effect may be beneficial for the local set-up but may affect certain activities of the
government negatively such as activities regarding the national defense and foreign affairs.
Currently, the budget for these activities are prepared by the congress through the General
Appropriations Bill but with the entrance of a federal form of government, this may change
how the national government will meet the needs of the country in affairs like national
defense and foreign affairs. Once the Philippines is under a federal form of government, the
national government will have less control in terms of budgeting for greater power when
administering the funds of the country is given to the leaders of the states.
With regards to taxation, according to Secretary Dominguez, different federal states
will tend to retain as much revenue as they can and give the national government as much
expenses (Dominguez, 2018). Tax administration under the federal form of government is
very challenging for the positive outcome it hopes to give is not felt within the first few years
of implementation. The national government will no longer have much influence on the tax
laws of the states. Some states may have taxes on certain items that other states do not have.
But because of the need of the stated to sustain their local governments, under a Federal set-
up, local governments are required to be more diligent in financing their requirements
through efficient tax collection. (Roque, 2017) And also because of this reason, local residents
may greatly feel this as a tax burden for officials of developing states would need make sure
that they have enough resources to sustain its growth.
Accounting and Auditing shall also be present in both unitary and federal forms of
government. This is to ensure that public funds are well-spent and managed properly. This is
also to assure that the hard-earned money of the public is used for their own good as well.
Given the set-up of a federal government, the national government has less control over the
local government because of decentralization; and because of this, a higher requirement on
fiscal discipline and accountability must be set in place. (Roque, 2017) Since states can
generate resources on their own, accountability and auditing must be well planned in the
local given to assure check and balances. Given the closeness of the government to its locals
due to its localized set-up, there should be great people participation in making sure that their
money is used on projects for their well-being and they should be very much involved in its
auditing and holding government officials accountable for their actions.
The shift to a federal form of government may result to the opposite instead of the
inclusive growth that the project aims. Some regions or local governments may not earn
enough revenue to sustain its people and the state’s growth. Rich “soon-to-be” states may
not be affected so much of this issue for they can sustain themselves such as NCR but poor
“soon-to-be” states such as those in the GIDA may have a harder time to grow. If places in the
GIDA cannot earn enough revenues to sustain its people, and if they would have no or minimal
support from the national government, thus making it harder for them to implement projects
and build infrastructure for the community. House Speaker Alvarez mentioned in an
interview that poorer areas or regions will be paired with richer areas or regions in order to
compensate with their monetary needs yet there is no assurance that this scheme will be
effective in the Philippine set-up.
 Another possible issue regarding fiscal administration is with regards to taxation, since
local government units would need to become more diligent in collecting tax and even making
tax laws to make sure that they generate enough revenue for the sustainability of their areas,
tax impositions may be heavy on the end of their people. As much as they are an independent
state, they would need to generate resources for their own consumption and that includes
monetary resources which will mostly come from tax collections. Higher taxes may be
acceptable if the people living in the area are generally well-off for they have the capacity to
pay. But for a middle-class Filipino family, higher payables due to tax may eat so much from
their household budget. Moreover, poor Filipinos will find it a lot harder to live since even the
basic necessities may have higher value added tax. Necessities may be hard to obtain given
their monetarily constraints because of the increase in tax that the state needs in order to
function.
Lastly, another issue concerning a federal set-up in the Philippines would be the value
of Filipinos having very close family ties. In an area, someone is always related to someone or
someone would always know someone. It has always been a Filipino trait wherein people
would opt to connect themselves with one another to establish connections that they could
possibly use in the future. This can have a negative impact in the auditing and accountability
of fiscal administration in the federal form of government set-up. Instead of making sure that
public funds are properly used, local citizens may cover-up for their officials for they may be
related to them or they are family friends with them. People may not speak-up if there is
something wrong in order to protect their relationships with those officials whom they are
connected to.
References:

Alvarez, P. (2018, February 7). Alvarez: Poor areas won’t be left behind under federalism
Read more: http://newsinfo.inquirer.net/966781/alvarez-poor-areas-wont-be-left-
behind-under-federalism#ixzz5A5Kxr2aq Follow us: @inquirerdotnet on Twitter |
inquirerdotnet on Facebook. (D. Yap, Interviewer) Inquirer.net.

Cliff Notes. (2016, March 15). Concepts of Federalism. Retrieved March 18, 2018, from
CliffNotes: https://www.cliffsnotes.com/study-guides/american-
government/federalism/concepts-of-federalism

Dominguez, C. G. (2018, January 23). Finance chief: Tax regime under federal gov’t seen
‘very challenging’ Read more: http://business.inquirer.net/244652/tax-
administration-revenue-finance-dominguez-tax-reform-package-economy-federal-
government#ixzz5AA5xbE7N Follow us: @inquirerdotnet on Twitter | inquirerdotnet
on Facebook. (B. O. Vera, Interviewer)

Encyclopedia Britannica. (2017, November 22). Encyclopedia Britannica. Retrieved from

Encyclopedia Britannica: https://www.britannica.com/topic/federalism

Punongbayan, J. (2018, January 24). Why federalism won’t necessarily boost regional
development. Retrieved March 18, 2018, from Rappler:
https://www.rappler.com/thought-leaders/194383-reasons-federalism-not-boost-
philippines-regions-development

Roque, E. L. (2017, May 24). Fiscal federalism: Its relevance to the Philippines. Retrieved
from The Manila Times: http://www.manilatimes.net/fiscal-federalism-relevance-
philippines/328866/

Saludo, R. (2018, February 8). Why Federalism? Here's the Biggest Reason. The Manila
Times.