Federalism and Philippine

Competitiveness: Increasing
Productivity and Promoting
Shared Prosperity
Prof. Edmund S. Tayao | Member, ConComm

AIM Rizalino S. Navarro Policy Center for Competitiveness

July 26, 2018 | Makati City, Philippines

why are we creating federated regions?
We want a more effective public administration.
The Code allowed us to recognise the vital role of LGUs, but at
the same time their fragmentation and limited jurisdiction (e.g.
provinces that are too small or municipalities the size of a
barangay) render them ineffective to service delivery and
prone to rent-seeking politics.
We want stronger local political institutions.
Empowering the local and regional governments would
strengthen our democracy. Regions integrate and consolidate
local plans and infrastructure. They act as both an agent of the
federal government and as a unified voice for LGUs. We create
more reliable versions of RDCs when we constitutionalise power
sharing under a federal set-up.
roles in economic development
Federated regions ensure integrated
economies and place greater value on
business-friendliness.

Federated regions are geared towards

increased economic viability. We focused on
enhancing their revenue generation powers.

Federated regions are designed to be more

responsive to local development needs—
both for LGUs and the communities.
 revenue generation powers of
federated regions
REVENUE GENERATION FINANCE FOLLOWS
DO NOT FULLY SUPPORT FUNCTION.
ASSIGNED FRs have the power to
EXPENDITURES. collect and administer the
LGUs are given the power to following taxes: documentary
collect and administer real stamps, estate, games and
property taxes and business amusement, transport
taxes. Other revenue franchise, vehicle registration
generation mechanisms are & road users, Pigouvian
not as profitable as these taxes, etc. LGUs retain tax
two taxes.
powers under LGC.

“issues on situs of tax “in situ collection and

collection” administration”
regional and local taxes

real property estate professional franchise

tax tax tax tax

donor’s documentary games & environment,

tax stamp tax amusement pollution taxes

road users’ vehicle transport local taxes

tax reg fees franchise fees etc
 revenue sharing
FEDERAL GOVERNMENT GETS 50%
This supports broader functions are retained at the
federal level. This also ensures macroeconomic stability.

FEDERATED REGIONS GET 50%

21% remains at the regional level to support regional
operations / cost of regionally devolved functions (i.e.
line-item budget from GAA)

CONSTITUENT LGUs GET 19% out of the 50%

this is equivalent to their internal revenue shares
 allocation of powers

infrastructure & socio-economic parks and regional laws regional budget

public utilities devt planning recreation & programs & finance

investment & regional creation of new territorial & regional culture

trade promotion tourism municipalities municipal waters & language

land use sports ancestral lands regional justice

& housing development or domain system
 We will appreciate your comments, suggestions,
and constructive criticism regarding the proposed
provisions in the ConComm draft as we are all
part of this significant democratic exercise.

thank you!