Regions should retain taxes paid by big firms – CAR, ARMM execs

MANILA, Philippines – Officials from the Cordillera Administrative Region (CAR) and the Autonomous Region in Muslim Mindanao (ARMM) proposed that lawmakers pass a law that would require big companies to pay taxes locally to help boost the regions' income.

On Wednesday, June 28, the House constitutional amendments committee held a dialogue with officials from CAR and ARMM to determine their fiscal status amid the plan of President Rodrigo Duterte to switch the country to federalism. 

During the hearing, the CAR and ARMM officials admitted local income generation is a problem in the regions, which remain largely dependent on funding from the national government. 

Negros Occidental 3rd District Representative Alfredo Benitez asked how much revenue CAR was able to generate from taxes in 2016.

Cordillera Regional Development Council vice chairperson Milagros Rimando said they were able to collect P5.7 billion in 2016, and P4.8 billion in 2015. But she lamented these figures combing are still smaller compared to the funding they receive from the national government, including their Internal Revenue Allotment (IRA) shares.

Baguio City Mayor Mauricio Domogan explained this is because major companies operating in CAR pay their taxes in the head offices in Metro Manila. 

Randolph Parcasio, consultant to the ARMM regional director, said they experience the same dilemma.  

“Our large taxpayers are paying their taxes in Metro Manila, such as those engaged in energy, mining, consumer goods, etcetera. We don’t have tax information regarding that,” said Parcasio. 

He then told lawmakers that legislation requiring companies to pay taxes in the specific region where they operate will help in local development.  

“We believe that given the appropriate law that large taxpayers will pay in the region they are operating, I think most of the administrative regions would be self-sufficient. And that is why that would be very material in crafting a new Constitution to establish a federal government,” he added.

ARMM is the only fully autonomous region in the country. It is comprised of the provinces of Basilan, Lanao del Sur, Maguindanao, Sulu, and Tawi-Tawi. 

CAR, meanwhile, was a special region created through Exeuctive Order 220 by President Corazon Aquino in preparation for full autonomy. The provinces of Abra, Apayao, Benguet, Ifugao, Kalinga, and Mountain Province, as well as Baguio City, form the Cordilleras.

Fiscal autonomy problems

Lawyer Anwar Malang, regional director for the ARMM office of the Department of Trade and Industry, said the government agencies in the region are inefficient compared to those in other areas. 

Some national government agencies also do not have counterparts in the ARMM, like the Social Security System and the Government Insurance Service System.  

“That is why, in the past administration, the ARMM was called a failed experiment,” said Malang. (READ: ARMM: Failed experiment no more

“The people in the ARMM have not failed in doing their best to deliver basic services in accordance with the limitations that they have or the existing resources. It’s just that, the agencies existing in the ARMM are not at par with the agencies in adjacent administrative regions,” he added.

Domogan, meanwhile, pointed out that CAR receives the lowest share in the IRA despite its semi-autonomous status. For 2017, CAR only received P14.87 billion in IRA, equivalent to 3.05% of the total shares in the country. 

“And this explains the reason why, in terms of infrastructure, there’s a lot to be done to connect the provinces within CAR,” said Domogan. 

House constitutional amendments panel chairperson Roger Mercado said they called for the dialogue to help Congress propose amendments to the 1987 Constitution, paving the way for federalism.

Under this form of government, the Philippines will be divided into autonomous regions that will be primarily responsible for their respective laws, industries, finances, infrastructure, culture, education, and development. 

The national government will only take care of matters of national interest, like foreign policy and national security. (READ: Will federalism address PH woes? Pros and cons of making the shift

The House panel already approved the bill calling for Congress to turn itself into a constituent assembly to amend the Constitution. – Rappler.com

Mara Cepeda

Mara Cepeda specializes in stories about politics and local governance. She covers the Office of the Vice President, the Senate, and the Philippine opposition. She is a 2021 fellow of the Asia Journalism Fellowship and the Reham al-Farra Memorial Journalism Fellowship of the UN. Got tips? Email her at mara.cepeda@rappler.com or tweet @maracepeda.

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