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RANDOM THOUGHTS | Financial Viability: The Key to Federalism

“THE RECENT Supreme Court’s decision correcting our Executive Branch’s erroneous interpretation of the 40% share of local government units (LGUs) of all national taxes radically changed my earlier ideas about the federalization of our country. The financial aspect, no doubt, should be one of the major factors to be considered in going federal. Surely, LGU would strongly fight to maintain their 40% allocation and right so.” (Chito R. Gavino III, “Journey to True Liberation”, 2022)

Our national government, wittingly or unwittingly, for decades, had taken advantage of our local government units (LGUs) with regards to proper interpretation of the coverage of the 40% share of the LGUs vis-à-vis all national taxes. The Supreme Court’s Decision mentioned above is now known as the “Mandanas Ruling”.

Last Tuesday, April 26, 2023, members of our Davao-based “Kilos Pederal sa Pagbabago” (KPP) Movement met to discuss our next move regarding our advocacy. The group decided to strongly pursue our advocacy of federalizing the Philippines in this new administration. KPP has been proposing to initially create five (5) Federal Regions in the country, namely:

  1. Northern Luzon Federal Region
  2. Metro Manila Federal Region
  3. Southern Luzon Federal Region
  4. Visayas Federal Region
  5. Mindanao (MinSuluPala) Federal Region

Taking into account the recent Supreme Court’s “Mandanas Ruling”, I told our group to seriously consider the financial viability of our proposal. I explained to them that my new enlightenment on this trying issue is to follow what I call the “parable of a child learning to walk”. It goes this way:

“First. A baby learns to crawl.

Second. With the help of an “andador” or walker, the child learns to stand and walk.

Third. Ultimately, the child learns to walk alone.”

I clarified further:

“In the same vein, Congress first adopted a Local Government Code and an Autonomous Region. Second, is for Congress to adopt a Philippine-Style Federalism. Third, Congress, in due time, should convert The Philippine-Style Federal System to ‘Full Federalism”. I hope that this analogy is clear enough for our readers to fully understand what I am driving at.

Back to the allocation of the national taxes. I pointed out to our group that we must respect the 40% LGU’s share of the national taxes. Hence, the remaining 60% could be shared by the proposed Federal Regional governments and the national government. I think that only 20% should go to the Federal Regional governments and 40% to the national government. In my proposed Philippine-Style Federalism, only three (3) Federal Regions will be created initially. These are:

  1. Luzon Federal Region
  2. Visaas Federal Region
  3. Mindanao (MinSuPala) Federal Region

To be less disruptive in the process of federalizing the Philippines, the existing administrative regions shall remain as administrative regions under the bigger Federal Region. Each of the Federal Regional governments shall be headed by one of the three (3) Vice Presidents, who shall be elected together with the President.

Now comes the bigger financial issue of our huge debt. Who should pay for these trillions of debt of our national government? I believe the debt that benefited a certain Federal Region must be paid by that particular region. Thus, there is a need to determine where exactly a certain debt was spent. Of course, when a debt benefited from said debt. Clearly, the financial aspect of going Federal must be first studied by the financial managers of our national government before our Unitary System of government shall be transformed into a Federal would be proven valid. Beware of the “recipe for disaster” federalism models being proposed by some quarters that are not financially viable! Prudence is wanting in going Federal. To play it safe, its evolution must follow the “parable of a child learning to walk” presented earlier.

This writer is the oldest living advocate of Federalism in the country. As they say, “In age, there is wisdom”. I have been in this business since the Martial Law era in our country.

Going Federal calls for an honest-to-goodness Constitutional Reform (CORE) via Constitutional Convention (Con-Con), which is the most democratic way of revising our flawed, Unresponsive and inadequate 1987 Constitution CORE is one of the two (2) elements of Real Social Transformation. 

My personal “new enlightenment” in this regard is that “to effectively change our current Constitution, we must first change the mindset and behavior of our people.” This means People Renewal first before undertaking Systems/Structural Reform or CORE.

Hence, my humble recommendation to our new administration is to launch first a People Renewal Program this year, 2023, and CORE thru Con-Con in 2025. To economize, we must synchronize the election of Con-Con delegates with the scheduled local election in 2025. For more details on this matter, watch for my forthcoming “Primer on Real Social Transformation in the Philippines”.

Our KPP Movement decided to convince our new administration to launch CORE and People Renewal in the Philippines.


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