Press Release
September 27, 2016

Pimentel: Federalism is next step
to decentralization in Ph democracy

Senate President Aquilino "Koko" Pimentel III Thursday said the next step in Philippine democracy is to move from decentralization to federalism to ensure a "society which is just and fair" for future generations of Filipinos.

"If we truly want to empower the regions, we must federalize. If we want to speed up progress and economic development across the country and lay the basis for a just and lasting peace in Mindanao, we must go federal," Pimentel told a conference on federalism in Makati City.

Pimentel cited the great disparity between a bustling, modern metropolis in the country's traditional center of political and economic power called Metro Manila and the poorest and least developed provinces. "We realize that all the poorest places are far from the center," he said.

Pimentel said the country is "ready for federalism," because the "conditions are ripe."

He said, "We must act quickly. There is no time to lose."

Filipinos want to live in a society "which is just and fair, which saves and shares, which is scientific and objective, which is peaceful and democratic, which is educated and healthy, and which is, most of all, happy and free, with overflowing love of God and country," Pimentel said.

President Rodrigo Duterte campaigned last May promising, among other things, a shift from the current unitary system, which has centralized power in Manila, to a federal system. This has been the advocacy for over three decades of the ruling party Partido Demokratiko Pilpino Lakas ng Bayan (PDP Laban), of which the President is chairman and Pimentel president.

Pimentel said the constitution would have to be amended because a mere revision of the Local Government Code devolving the powers and resources to make federalism work could be easily taken back unilaterally.

He also allayed fears that the internal revenue allotments (IRAs) of local government units (LGUs) would disappear as he debunked criticisms that rich regions near Metro Manila would enjoy more benefits while poor regions would not get their subsidies.

"This argument comes from a false understanding of federalism. It assumes that in a federal countries the rich regions get to keep all their income and revenue while the poor regions are left to their own devices. They are grossly misinformed," he said.

Federalism, Pimentel said, requires the continuation of the IRAs or what is termed as "fiscal transfers" from the federal government to poor regions.

Pimentel said he planned to introduce a new system called conditional transfers wherein the federal government attaches conditions on the use and purpose of the funds by the regional and local governments.

"These transfers are program specific and cannot be used for other purposes. And we will use these conditional transfers to promote national purpose and set standards in various devolved fields like health care or education," he said.

In Federal countries like the United States, Canada and Germany, the principle of equalization or revenue sharing that provides for fiscal transfer from the federal government to the regions has enabled the federal states to better meet their responsibilities, Pimentel said.

He said the 20-80 revenue sharing scheme, in favour of regional governments, being proposed by PDP Laban is simply for discussion.

"The guiding principle which will determine the taxing powers and revenue share of each level of government is that the allocated resources must be commensurate to the powers and responsibilities assigned to them," he said.

Since the LGUs are to be empowered, he said, "we need to provide them the needed resources to be able to fulfil their mandate. This is consistent with our belief that local governments deserve a bigger share of government resources since they are in a better position to address the needs of their constituents."

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