Most important of the regional units’ powers are to levy and collect the following taxes, licenses and fees: real property tax; estate tax; donor’s tax; documentary stamp tax; professional tax; franchise tax; games and amusement tax; environment tax, pollution tax, and similar taxes; road users tax; vehicle registration fees; transport franchise fees; and local taxes and other taxes which may be granted by federal law.
Five ill effects can ruin power devolution, says economics professor Victor Abola, University of Asia and the Pacific. One is hyperinflation, like the 2,500% that hit federalized Mexico and Brazil a decade ago. The national governments could not control the federated states’ deficit spending, mostly in aide of local officials’ reelection, Abola recalls. Another is unequal income distribution among regions. Only three of the 18 proposed regional states – Metro Manila, Southern Tagalog and Central Visayas – are expected to be self-supporting income-wise. PCIJ cites data from the Bureau of Internal Revenue, Philippine Statistics Authority and Department of Budget and Management. Third, federalism can drain government finances and disrupt infrastructure programs. No less than Economic Planning Sec. Ernesto Pernia says so. Abola explains: “We have problems with absorptive capacity; infrastructure spending might be set aside because collections of regions won’t be enough.” Fourth, double taxation will scare away investors. “If regions are given power to impose taxes, all the more we will be uncompetitive in ASEAN,” Abola adds. Lastly, there will be duplication of expenses. “Regions will say they need more for staff and other expenses – wasteful,” Abola says.
Will not the dynasts thrive in such economic and taxation powers? All the more they will control businesses in their locales, from highway construction to family resorts, bus lines to shipping, construction supplies to malls.
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