The financial puzzle that is the Federalism Constitution

Running the numbers. [Photo source: firstthings.com]

By JoeAm

Preliminaries

Forgive the length of this article. The main points are quickly summarized, but I have included appendices to fill in the particulars for those who are thorough or curious.

One caveat: There are a lot of numbers to consider. This is not a search for accounting precision. It is a search for meanings. I’ve had to make some guesses to allocate revenues and expenses between the Federal Government and the States. I think the final delineation is reasonable, if not accurate to the penny. Consider it a starting point, or general guidance.

Serious concerns have been expressed about financials

One would think that the work of funding of the new States in the federalism form of government would be thorough and detailed, filled with numbers and projections and fact-certain assurances that even the poorest states would be made whole. But it is not. Fiscal matters are very simply stated. It is not known if there are worksheets or charts that detail the fund flows or not.

The Consultative Committee that drafted the Federalism Constitution was working to a time deadline and, as with transition arrangements, it left the final fiscal formula up in the air, pending review by economics people. The following article explains this, and also explains that economic officials are worried that some regions may be left behind: DOF worried some regions like Eastern Visayas could be left behind in federal gov’t [Politico]

The nation’s economists are deeply worried about federalism, as this additional article explains: Interest rates ‘will go to hell’ under federalism – Dominguez [Manila Times]

Let’s take a look at what the draft Constitution says.

Allocation of revenues

Here are the main elements of revenue for Regional governments as currently set forth in the draft Federalism Constitution:

  1. The taxes States are allowed to raise:

(a) Real Property Tax;
(b) Estate Tax;
(c) Donor’s Tax;
(d) Documentary Stamp Tax;
(e) Professional Tax;
(f) Franchise Tax;
(g) Games and Amusement Tax;
(h) Environmental Tax, Pollution Tax, and similar taxes;
(i) Road Users Tax;
(j) Vehicle Registration Fees;
(k) Transport Franchise Fees; and
(l) Local taxes and other taxes

  1. Not less than 50% of income taxes, excise taxes, value-added tax, and customs duties collected by the Federal Government, and divided equally among the Regions.
  2. Some undetermined share of the Equalization Fund, if needed (3% of annual general appropriations).
  3. Any monies provided by Congress in the annual budget.
  4. 50% of all net revenues derived from the exploration, development, and utilization of all natural resources within their territory.

There are 18 Regional governments including the Bangsamoro and Cordilleras regions. The 16 Regions are not identified and no maps delineating them are a part of the Constitution.

Here is what Department of Budget and Management’s (DBM’s) projected 2018 revenues would look like if allocated between the Federal Government and States:

What the text of the draft Constitution says is a bit disturbing. It says the revenues shared by Federal to the Regions (States) (at not less than 50%) would be shared EQUALLY (highlighting mine) by the Regions. So my poor region of the Eastern Visayas would get the same P81 billion that the Central Visayas would get, even though Central’s needs, anchored by Cebu, are so much greater. There is no proportional allocation stated in the text. We’ll note this as a huge flaw.

For your reference, here is the DBM file I used to make these revenue allocations: DBM Revenue Projections for 2018

Okay, what has to be funded?

Allocation of expenses

Listed below in Appendix A are the powers assigned to the Federal Government and the States as taken from Article VII of the draft Federalism Constitution, verbatim. I have used this as a guide to align expenses from the DBM budget to fit with the powers of either the Federal Government or Regions (states).

Appendix B shows the complete listing of expenses pulled from the 1,400 page DBM budget. But I’ll do a summary table of the big items.

It is important to note that three major functions, agriculture, transportation and health, are not explicitly addressed by either the Federal or State powers. Furthermore, as Sec Dominguez stated, payments for the considerable national debt are not included in the set of powers (and responsibilities). I have allocated 10% of Agricultural and Transportation expenses to Federal and 90% of Health expenses, the latter following the Education model. The Regions get the remaining amounts. I’ll deal with debt later in the report.

Here is my summary table of the larger expense items, with a lot of smaller expenses grouped within the “Other Expenses” category. The complete allocation is shown in Appendix B.

The first thing to note is that the total budget expenses of P2.3 trillion are far short of the revenue of P2.8 trillion. Yet the nation is running at a deficit. What’s missing?

What the Federalism draft does not address

The expenses allocated above are those that go to Congress for approval. There are other items that are funded automatically and are not included in that budget. I’ve not been able to find a clear reconciliation of the two. DBM issues a “2018 People’s Budget” that is a hodge podge of confusing exhibits and data. (I wonder who even looks at that.) On page 15, three such expenditure categories are listed:

  • Internal Revenue Allotment (amounts passed from National Govt to Local Govt Units) at P522.7 billion
  • Debt-Service Interest Payments at P354.0 billion
  • Others (Retirement/Insurance premiums, tax expenditures, other) at P104.0 billion

The internal revenue allotments are tricky. LGU’s have operating expenses and they are not included in the Regional expenses above. If the P522.7 billion is still passed to the Regions for LGU operations, it has to be funded and the Federal Government operates at a huge deficit. If the P522.7 billion allotment is not passed to the regions, then the funding for existing LGU operations comes from the allocations above and we have to put another P522.7 billion in expenses into the above chart for LGU operations. That captures all Regional expenses. Assuming the latter, we get the following calculations:

  • Regional expenses: P1,138.8 billion + P522.7 billion = P1,661.5 billion against revenue of P1,454.2. The Regions operate at a deficit of P207.3. The larger regions that receive (inadequate) fixed, equally-shared allocations operate with a huge deficit.

Debt Payments, and Other Expenses can be allocated 100% to Federal Government. Our adjustment becomes as follows:

  • Federal expenses: P1,196.0 + P354.0 billion + P104.0 billion = P1,654.0 billion against revenue of P1,386.3. The Federal Government operates at a deficit of P267.7.
  • Well, debt is the fudge-bucket, isn’t it? If Federal no longer has to fund the Regional allocations, money raised through debt will go down and so will the interest burden. But then both Federal and Regions run at the deficits we have shown. If debt is acquired to fund LGUs at some level as well as Build Build Build, that debt-funding burden will increase. Taxes will likely have to go up.

“Manila, we have a problem!” and we can all see why Secretary Dominguez got confused and frustrated. Maybe there are off budget revenues, I don’t know. But all of this is clearly all not explained anywhere.

This is not a good way to run even a small business, much less a nation.

Also not documented anywhere by the Consultative Committee are the costs of the new functions at the State level which would be incremental add-ons and not covered in any way by transfer of existing expenditures to the Regions. Each Region will have its own legislature and associated staffing, buildings, and expenses. Each will have a court system and executive functions, some new, some transferred from Federal.

Very clearly, those regions that fall short on the revenue side . . . very likely the larger urbanized regions . . . will need to assess additional taxes to remain whole. No estimate has been made of possible new taxes required to support the regions.

Conclusions

The findings of this analysis are as follows, with steps that need to be taken highlighted in italics:

  1. No financial details have been provided to support the allocation formulas. Detailed workups need to be done by DBM where the expertise rests to align expenses properly by Federal Government or Region. Each region will have different levels of expenses. A total of 19 different financial pro-formas should be drawn up, one for each region and the Federal Government. Each should project forward five years.
  2. The equal allocation of Federal revenues to the Regions is problematic and penalizes larger Regions that have larger operating demands. The formula for revenue allocations should be proportional, perhaps by gross state product, or by level of allocated expenses, for the respective regions.
  3. The treatment of existing revenue allotments to LGUs is not explained anywhere. If the Federal Government continues to fund these expenses, it operates at a huge deficit. If the funding is picked up by the Regions, they operate at a deficit from the getgo. The treatment of the revenue allotments needs to be explained and incorporated in the pro-forma financials.
  4. The functions of health, transportation, and agriculture appear to have been omitted in the delineation of Federal vs Regional powers. They need to be assigned. Then expense allocations can be properly aligned.
  5. There are two additional problems that need to be clarified: (1) the expense of new Regional functions in Executive, Legislature, and Judiciary, and (2) new State taxes, if any. These matters need to be quantified and brought into the financial pro formas.
  6. The fudge bucket is Federal debt. What will it be after LGU allocations are resolved and Build Build Build growth is factored in? Will Federal have sufficient sources of revenue (raising taxes?) to fund the expected debt? What will this do to interest rates, inflation, and the nation’s debt rating? The debt and debt service burdens need to be quantified.

-end-

 – – – – – – – – – –

APPENDIX A: Division of powers between the Federal Government and States

ARTICLE VII

SECTION 1. The Federal Government shall have exclusive power over:

  • (a) Defense, security of land, sea, and air territory;
  • (b) Foreign affairs;
  • (c) International trade;
  • (d) Customs and tariffs;
  • (e) Citizenship, immigration and naturalization;
  • (f) National socio-economic planning;
  • (g) Monetary policy and federal fiscal policy, banking, currency;
  • (h) Competition and competition regulation bodies;
  • (i) Inter-regional infrastructure and public utilities, including telecommunications and broadband networks;
  • (j) Postal service;
  • (k) Time regulation, standards of weights and measures;
  • (l) Promotion and protection of human rights;
  • (m) Basic education;
  • (n) Science and technology;
  • (o) Regulation and licensing of professions;
  • (p) Social security benefits;
  • (q) Federal crimes and justice system;
  • (r) Law and order;
  • (s) Civil, family, property, and commercial laws, except as may be otherwise provided for in the Constitution;
  • (t) Prosecution of graft and corruption cases;
  • (u) Intellectual property; and
  • (v) Elections.

SECTION 2. Within their regional territory, the Federated Region shall have exclusive power over:

  • (a) Socio-economic development planning;
  • (b) Creation of sources of revenue;
  • (c) Financial administration and management;
  • (d) Tourism, investment, and trade development;
  • (e) Infrastructure, public utilities and public works;
  • (f) Economic zones;
  • (g) Land use and housing;
  • (h) Justice system;
  • (i) Local government units;
  • (j) Business permits and licenses;
  • (k) Municipal waters;
  • (l) Indigenous peoples’ rights and welfare;
  • (m) Culture and language development;
  • n) Sports development; and
  • (o) Parks and recreation.

APPENDIX B: DBM projected expenses for 2018

2018 expense allocations by function Projected Alloc to Alloc to Amt to Amt to Amt Per
Millions of Pesos 2018 FedGov Regions FedGov Regions State (18)
Congress of the Philippines 15,203 100% 0.00% 15,203 0 0
Office of the President 6,072 100% 0.00% 6,072 0 0
Office of the Vice-President 451 100% 0.00% 451 0 0
Agrarian Reform 10,278 100% 0.00% 10,278 0 0
Agriculture 54,168 10% 90.00% 5,417 48,752 2,708
Budget and Management 2,187 100% 0.00% 2,187 0 0
Education 613,055 90% 10.00% 551,749 61,305 3,406
State Universities and Colleges 64,561 90% 10.00% 58,105 6,456 359
Energy 2,659 100% 0.00% 2,659 0 0
Environment and Natural Resources 27,932 10% 90.00% 2,793 25,139 1,397
Finance 19,728 100% 0.00% 19,728 0 0
Foreign Affairs 19,656 100% 0.00% 19,656 0 0
Health 107,227 90% 10.00% 96,504 10,723 596
Information and Communications Technology 6,934 100% 0.00% 6,934 0 0
Interior and local Government 172,327 0% 100.00% 0 172,327 9,574
Justice 18,474 50% 50.00% 9,237 9,237 513
Labor and Employment 11,165 10% 90.00% 1,116 10,048 558
National Defense 144,963 100% 0.00% 144,963 0 0
Public Works and Highways 643,253 20% 80.00% 128,651 514,602 28,589
Science and Technology 21,118 100% 0.00% 21,118 0 0
Social Welfare and Development 137,988 10% 90.00% 13,799 124,189 6,899
Tourism 3,376 10% 90.00% 338 3,039 169
Trade and Industry 6,739 20% 80.00% 1,348 5,391 300
Transportation 73,843 10% 90.00% 7,384 66,459 3,692
National Economic and Development Authority 9,097 100% 0.00% 9,097 0 0
Presidential Communications Operations Office 1,351 100% 0.00% 1,351 0 0
Other Executive Offices 39,665 50% 50.00% 19,832 19,832 1,102
Autonomous Region in Muslim Mindanao 33,470 0% 100.00% 0 33,470 1,859
Joint-Executive-Legislative Council 4 100% 0.00% 4 0 0
The Judiciary 34,774 20% 80.00% 6,955 27,819 1,546
Civil Service Commission 1,587 100% 0.00% 1,587 0 0
Commission on Audit 12,113 100% 0.00% 12,113 0 0
Commission on Elections 16,152 100% 0.00% 16,152 0 0
Office of the Ombudsman 2,588 100% 0.00% 2,588 0 0
Commission on Human Rights 678 100% 0.00% 678 0 0
TOTAL APPROPRIATIONS 2,334,837     1,196,047 1,138,790 63,266
Comments
29 Responses to “The financial puzzle that is the Federalism Constitution”
  1. dcrispin70 says:

    Financing isn’t the problem. There is no clear picture of what to finance in the federal governments, for all branches and units. I haven’t seen the draft, but I assumed some people are clueless somewhere.

    • Finances are everything. Financing is an important part of the finances. You are right that there is no clear picture of what to finance, other than divide the powers, divide the responsibilities, and put in a formula that gets close to balancing it all out. The Consultative Committee was not working to build a better Philippines. They were working to satisfy a client who only wanted certain things: control of transition, human rights removed from badgering him, and a division of the Republic into family-sized chunks for enduring rule by the entitled. Don’t wast time on the draft, I’d say. It is so full of holes as to be declared DOA (“Dead on Arrival” in the President’s hands).

  2. edgar lores says:

    *******
    1. Thank you for expending effort on analyzing the financial aspect of the draft of the Federal Constitution.

    2. We have learned that the draft is deficient in several aspects so far:

    o The diminution of human rights
    o The exact division of the states
    o The actual mechanics of the transition from a unitary to a federal system
    o And, now, the financial aspects

    3. One of the things that strikes me about the financial aspect is the lack of standardization. The states are free to formulate their own taxes without federal oversight. This lack of standardization runs through other areas, such as the justice system and culture and language development.

    4. Again, to use the analogy we used before, the people are being asked to buy a pig in a poke.

    5. The Consultative Committee have realized they have done a bad job. Perhaps, this is the reason for their secrecy in releasing the draft. Now, they are pointing fingers and asking, “Why didn’t you help us?” Puno, Pimentel, and Ranhilio Aquino have eggs smeared on their faces. And the concept of federalism has been reduced to a sex joke — pepedederalism.
    *****

    • Yes, I will do a blog on Thursday that itemizes the “deal killers”, several of which you have mentioned. As I look at them, I conclude there is no way a rational person would sign on to this draft constitution. It is grossly flawed. If Federalism is needed, the regions would be demanding it, but are not. They have all the power in the world now, and use it poorly for the people (but well for their own empowerment and enrichment). Federalism blocks as many people as it promotes to duke, so can upset what is today quite a nice apple cart for those already having power. Someone needs to pull out a gun and put a bullet through this draft constitution so we can move on to working on things that are genuinely helpful to the nation.

    • Tweeto Wakatono says:

      I think this piece by Joe –like almost all his previous ones– is “Good Job” : substantive and salient. In this blog, I choose to make little or very minor unsubstantive intrusions on the 10 points raised by Mr Chemrock.

  3. chemrock says:

    Joe you did some pretty good bean counting over the week-end.

    Allow me to note on some specifics as I read down the text.

    1. Before the tricky issues of Inland Revenue Allotment, Debt servicing and Others, revenue vs expenditure is Php 2.8T vs Php 2.3T. You asked where is the deficit? There is no deficit.

    2. On infras, they ought to have some policy framework in place. Who does what? It might rest on ownership. Whoever owns it, funds it. Most infras should rightly be state and LGUs responsibilities. Federal may want to build something, they should own and fund it. If stat wants their own additional stuff, they build, fund and own it themselves.

    3. LGUs — they should no longer be Fed responsibilities, but the respective states’.

    4. Debt servicing in respect of past infras — that’s the problematic part. I suggest all past debt servicing relating to Marcos’ be borne by the state that encompasses Illocos Norte.

    5. Any losses incurred by corruption of Fed officials in future — I suggest this be quantified and be paid for the the state where the scumbasg came from.

    6. The total expenditure of Php 2.3 should be apportioned the way you showed. All Federal Agencies will be born by Federal and not the states. The Revenue Allocation formula will have factored in this.

    7. There will be tremendous duplicity of state expenses which are to be born by the state.

    8. Without doubt, states need to seek additional revenue. Here comes state income tax, suckers.

    9. Overall at the national level, the aggregate of these duplicated expenses of the states will be huge. This is the financial pain of Federalism. Measure this to the expected benefits and it’s easy to see if the Southerners are right, or it’s suckers, everyone.

    10. There should be a summary that shows the Income & Expenditure at national level — a sort of consolidated I&E of Federal plus all the states. This way the financials can make some sense.

    • chemrock says:

      OOPs

      6. The total expenditure of Php 2.3 should be apportioned the way you showed.

    • chemrock says:

      OOPs again

      6. The total expenditure of Php 2.3 should….. NOT NEVER….. be apportioned the way you showed.

      Sorry — difficult to handle the smart phone

    • 1.0 Re ‘deficit’, I don’t know the accounting/economics language. I was surprised that revenue covered expenses so easily. Well, when you throw in the missing items (debt, other) and the new governments, it does not.
      4.0 Yes, if that is the policy resolution on debt, then the 19 spreadsheets I recommended should show that allocation. The ConCom failed to make such treatment clear, thus causing Secretary Diokno’s blood pressure to shoot up to unhealthy levels.
      6.0 I’m confused on the point. You might want to restate it.
      8.0 Yes, it sure appears that way. Courts, legislatures, executive offices. Most brand new to handle all the added powers of taxation and spending.
      10. Yes, that is the 19th pro-forma recommended.

      • chemrock says:

        Re (6) What I meant is there should be no allocation. All agencies that the Federal govt is responsible, they should fund it. States will fund all their own expenses.

        One funny thing I can’t figure out is this. Pension is Fed responsibility. Does that mean whilst states are responsible for the payroll of state civil servants, the Fed will pay the pension?

        • karlgarcia says:

          There are agencies not covered by GSIS like the AFP, PNP judiciary, fire department, bjmp, etc.

          At present it is lumped under pension and gratuity fund.

        • Right, but to understand the magnitudes involved, we can use the current allocations to size the various functions and gain insight into the integrity of the allocation formulas shown in the constitution.

          The pension question is good. I suspect it would be like debt. Where a state is responsible, pension funds would transfer there. For AFP and PNP, which are national functions, the Federal Government would handle it. These are the kinds of details that just got skipped in the rush to present a document for the President’s SONA.

    • Tweeto Wakatono says:

      My minor intrusions should only be between me and Mr. Chemrock but can’t reach him directly. I won’t mind if Joe will PDIIIMNOCSS (Please Delete Instantly If I May Not Or Cannot Say So).

      I just remember things in the distant past; but jargon makes me impertinent and obtrusive. That money matters in government in macro terms are four: (1) Revenue, (2) Expenses, (3) Taxation, and (4) Public Debt.

      So wrote Mr Chemrock . . . My impertinence are in brackets, capitals and Italics:

      “Allow me to note on some specifics as I read down the text.

      1. Before the tricky issues of Inland Revenue Allotment, Debt servicing and Others, revenue vs expenditure [expenses] is Php 2.8T vs Php 2.3T. You asked where is the deficit? There is no deficit. [because public debt has been included under revenue?]

      2. On infras, they ought to have some policy framework in place. Who does what? It might rest on ownership. Whoever owns it, funds it. Most infras should rightly be state [federal] and LGUs [regional because LGUs are provinces under the regions] responsibilities. Federal may want to build something, they should own and fund it. If stat [regions] wants their own additional stuff, they build, fund and own it themselves.

      3. LGUs [provinces]— they should no longer be Fed responsibilities, but the respective states’ [regions].

      4. Debt servicing in respect of past infras — that’s the problematic part. I suggest all past debt servicing relating to Marcos’ be borne by the state [Ilocos Regional government] that encompasses Illocos Norte.

      5. Any losses incurred by corruption of Fed officials in future — I suggest this be quantified and be paid for the the state [by the regions or LGUs] where the scumbasg came from.

      6. The total expenditure of Php 2.3 should be apportioned the way you showed. All Federal Agencies will be born by Federal and not the states [regions]. The Revenue Allocation formula will have factored in this.

      7. There will be tremendous duplicity of state expenses [expenses by regions] which are to be born by the state [Feds].

      8. Without doubt, states [Regions] need to seek additional revenue. Here comes state [Region] income tax, suckers.

      9. Overall at the national [Federal] level, the aggregate of these duplicated expenses of the states [regions] will be huge. This is the financial pain of Federalism. Measure this to the expected benefits and it’s easy to see if the Southerners are right, or it’s suckers, everyone.
      10. There should be a summary that shows the Income & Expenditure [Revenue & Expenses] at national [Federal] level — a sort of consolidated I&E [R&E] of Federal plus all the states [Regions]. This way the financials can make some sense.

      10. There should be a summary that shows the Income & Expenditure [Revenue & Expenses] at national [Federal] level — a sort of consolidated I&E [R&E] of Federal plus all the states [Regions]. This way the financials can make some sense.

      Lest the above confuses more the readers, the soonest it gets deleted the better and I won’t mind.

      • Ah, it’s a fine comment, although seems mainly to be debating the choice of words. Chemrock is British schooled, from Singapore. And he is a finance guy, so he speaks two languages/dialects different than many of us do. As for states vs regions, I discovered I had been calling them States too (a reflection of my American heritage). I got that out of the text at the last moment, but the tables still reflect the error. By further way of background, as editor of a discussion forum where some people participate in a second language, I don’t really get hung up on grammar or syntax. Plus auto-correct plays havoc with typing now and then, and the comments have no edit function. I think it’s better that they place their ideas in action, and the reader can practice reading the way it is in the real world. Imperfect. And diverse.

      • chemrock says:

        There is no privacy here. We are all allowed to comment on anybody’s comment.

        Each of us have our own styles of writing, some better than others. Nothing to be ashamed of. It’s just the way it is. We are different. We have our own idiosycracies, as sure as I’m getting used to your style.

        Regarding states = regions, federal = national. LGUs are provincial bodies, cities and barangays — OK it’s wacky at the moment there being no definitions. But we all know what we mean. Small matter, but thanks for bringing it out.

        (1) On hindsight I stated the unnecessary. I now get what Joe meant when he said “where’s the missing deficits’. He meant the same thing – there is no deficit. However, you suggested debts may be under revenue, thus no deficits. That’s incorrect. Funds from loans don’t get reported in the Budget under revenue. Funds from loans will show up in the Balance of Payments.

        • Tweeto Wakatono says:

          My Amen to Joe, my thanks Mr.Chemrock. Know thyself so a sage say. I am a captive of my past, of the many jargons and nuances of the language of the places and people where I had been and of my varied fields of study. Some call it affectations. I used to spell British, talk Tok Pisin, etc. etc. I am almost Mr. Babel which should replace Tweeto (not to talk too much). But readers may disagree but This Society could easily be a THINK TANK organization for good governance of the Philippines.

  4. “The first thing to note is that the total budget expenses of P2.3 trillion are far short of the revenue of P2.8 trillion. Yet the nation is running at a deficit. What’s missing?”

    There seems to be a surplus of .5 trillion. Maybe the question should be: Where is it? What will it be used for?

    • Juana Pilipinas says:

      So the deadline for this cha-cha is supposed to be before the 2019 midterm election so a plebiscite/referendum on the question of Federalism could be voted on by the people? Looks like it needs to backed out to the 2022 election or shelved altogether if a lot of people could not make head or tails of it.

      • I think Secretary Lorenzana and Mocha Uson drove two 10 penny nails into the coffin recently, Lorenzana by saying the nation is “not ready” for federalism, and Uson for her horrid, lewd promotional video. It will also have to get past the Senate, who will not approve it. If the House tries to ram it through, it will go to the Supreme Court. It is clear that the reason for the rush rush with a sloppy document is not to build a nation, but to satisfy President Duterte’s ambitions.

    • Andres 2018 says:

      Debt payments.

    • There is no surplus when debt and other expenses are factored in.

    • Tweeto Wakatono says:

      Ms Juana P

      I am not sure but what’s seems puzzling the people may be the difference on carpentry of budgeting and accounting in business management field and fiscal administration in governance.

      The application of financial management jargon into the fiscal administration perspective could ultimately, be the DNA of permanent poverty of population majority. In business if big loans become part of INCOME and small repayment of loans become part of EXPENDITURES AND when in government big borrowings, enormous public debts become part of REVENUE while appropriations for public debt principal and interests payments become part of the annual EXPENSES, the SUMS of numbers in both cases will be POSITIVE.

      In the first case (business) the benefits of budgeting and accounting carpentry are enjoyed normally by the business lords and should be enjoyed immensely by the people or consumers. In the second case (government) the fairy tale in budgeting benefits more those who governed and their cronies because the approved AAA (Annual Appropriations Act) is always positive while the ricochet on the poor majority remains worseningly negative.

      It’s okay if this comment is PDIIIMNOCSS (Please Delete Instantly If I May Not Or Cannot Say So)

  5. Andres 2018. says:

    1. On the issue of revenue vs expenditures of 2.8T and 2.3T, the difference would be the amount allocated for debt payments. Counting that, it would be a deficit.

    2. Human rights, as i remember it was still there, discuss extensively on a different Article/Section of the proposed constitution.

    3. On the poorer regions, they will receive additional funds from the Federal Government. The Federal Government allocations for expenditures for social services are intended for these poorer regions.

    • 2. https://joeam.com/2018/08/01/human-rights-and-the-duterte-federalism-constitution/
      3. If taxes from the Federal Government are allocated equally by region, the more populous regions would very likely have huge shortfalls while the less populated regions would be smiling with their newfound riches. Federal will have a hard time making the populous regions whole. The problem is the “equal allocation” formula, it seems to me.

      • Andres 2018. says:

        3. Agree, less population more budget per person. Hopefully, this sharing will alleviate the countryside. Probinsyanos will consider staying in the province than going in Manila, decongesting Manila population in the process.

    • Tweeto Wakatono says:

      In general and may be in principle, the underlying goal and spirit of a constitution to replace a “broke” constitution should be one that cultivates citizen intiative, foster self-reliance and progress and not to promote or enhance dependency and mendicancy which are the main causes of political family dynasties.

      These goals should be the overarching bases of the allocation of the scarce resources of the government to its spatial instrumentalities.

    • Micha says:

      “On the poorer regions, they will receive additional funds from the Federal Government.”

      This makes the case for federalism even weaker. It’s being banded about by proponents that federalism will led to regional independence and autonomy. We already have a trial run for autonomous rule in ARMM and the Cordillera Administrative Region (CAR). How did that experiment in autonomy fared? Did it made the lives of people in those regions any better?

      There is nothing in the current set up that will prevent the national gov’t from doing for the regions what federalism claims and pretends it could.

      All that hoopla about federalism is nothing but a distraction and a gift to regional dynasties and warlords.

      • Andres 2018. says:

        1. Funds from Federal Government that will be given to poorer region is a safety net, ensuring that no regions will be left behind. I don’t think it is a weakness if you do something that would prevent the negative effect of a federal system.

        2. ARMM and CAR. Its main purpose is to promote peace and culture, respectively, which is actually a success. Interestingly, CAR was among the region with the highest GDP per capita and ARMM was among the lowest. However, it is not a trial run for federalism since the budgeting set-up is very much different.

        3. The states/regions have exclusive powers.

        4. Dynasties is very much possible, whatever the system is, Father Arroyo>Daugter Arroyo. Mother Aquino>Son Aquino. But warlords? How?

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