Pakinggan si Sec. Dominguez at economic team

NARITO ang report ukol sa ninanais ni Finance Secretary Carlos Dominguez III na magkaroon nga ng dialogue sa fiscal provisions ng federalism draft charter na ginawa ng Consultative Committee:

Finance Secretary Carlos Dominguez III is pushing for a dialogue on the fiscal provisions of the federalism draft charter drawn up by the Malacañang-backed Consultative Committee. Dominguez pointed out in a statement yesterday that the draft federal Constitution contains ambiguous provisions on the allocation of expenditures for the would-be federated government and its federated regions, which underscore the urgency of opening more discussions on this proposed document crafted by the ConCom  tasked to review the 1987 Constitution.

“As we pointed out earlier, we never stated that we are against federalism. Rather, with respect to the fiscal provisions of the proposed Constitution, there are ambiguous provisions on revenue assignment and there are no provisions on expenditure assignment.  There are, likewise, principles on revenue sharing­ that do not appear to be well studied,” Dominguez said.

Dominguez, a classmate of the President during high school at the Ateneo de Davao University, is one of the closest advisers of Duterte even during the campaign period that led to the May 2016 presidential polls. The Finance chief stressed that  while the economic team is not against federalism, it has the responsibi­lity to point out the ambiguous and unclear provisions in the proposed draft charter, “especially when the possible repercussions could result in dire, irreversible economic consequences.”

“We welcome a discussion on the draft so that it is clear and unambiguous. We do not want the revenue assignment and the expenditure assignment to be misunderstood, as what happened in the recent case involving the Internal Re­venue Allotment (of the local government units),” Dominguez said in a statement. Dominguez’s call for a dialogue on the financial provisions of the proposed federalism charter came in the midst of Con-Com member Ranhilio Aquino’s urging the President to fire him and Socioeconomic Planning Secretary Ernesto Pernia for stating their views on the matter.

“We respect the opinion of Fr. Aquino, but we believe that such attitude would not enrich the level of discourse on the pro­posed Constitution.” Dominguez pointed out that while the draft Charter­ contains  provisions on the taxation powers of the Federal­ Go­vernment and the Federated Region and a provision on reve­nue assignment in which the Federated Regions shall be given a 50 percent share in income, excise, value added taxes and customs duties, “there is no provision on expenditure assignment.” The draft Constitution also enumerates the exclusive powers­ of the Federal Government and the Federated Regions but is silent  on the funding source for the exercise of these powers, he said. 

Citing an example, Dominguez said that although the draft Constitution provides for an Equalization Fund, which shall not be less than 3 percent of the annual General Appropriations Act,  it does not state whether this will be taken from the share of the Federal Government or of the Federated Regions.

The Equalization Fund refers to the allocation for the fede­rated regions that would be distributed based on the needs of each region, with priority given to those that require greater support to achieve financial and economic sustainability as determined by a “Federal Intergovernmental Commission.” More­over, the recently enacted Bangsamoro Organic Law provides for a 5 percent block grant. “It is not clear from whose share this will come from,” Dominguez said.

He said that given these ambiguities, “it is our duty and responsibility to point these out and engage in a healthy, level-headed discussion, especially when the possible repercussions could result in dire, irreversible economic consequences.” 

“We believe that these should be set out clearly so that they adhere to the principle that ‘funds follow function and ‘funds follow program,’” Dominguez said. Dominguez said that based on the fiscal provisions of the draft federal Charter, the federal government would incur a deficit of 6.7 percent, which may result to a credit rating downgrade for the Phi­lippines, which currently enjoys an investment-grade rating. A credit rating­ downgrade would lead to higher interest rates, Dominguez pointed out. To avoid this negative economic consequence and maintain the current deficit target of 3 percent, Dominguez said “the Federal government will have to cut its expenditure program by P560 billion.”

“This means the national government may have to lay off 95 percent of its employees, or reduce the funds for the ‘Build Build Build’ program by 70 percent, or a combination of both,” he said.