“Incoming administrator must prioritize economic growth over federalism”


MANILA, Philippines — As the country faces a looming fiscal crisis due to the impact of the COVID-19 pandemic, the new administration must prioritize the economy over the plan to shift to federalism, according to the former secretary for socio-economic planning Ernesto Pernia.

During an interview with “The Chiefs” on Cignal TV’s One News on Friday night, Pernia said the move to federalism and constitutional change can wait, given that the next government has other “pressing matters”. to settle.

“I wouldn’t address this in the first year of the new administration,” the former head of the National Economic and Development Authority (NEDA) said when asked about the possible Charter change as soon as President-elect Ferdinand Marcos Jr. will be sworn in. .

“There’s a lot of work to be done to fuel economic growth… It’s not as urgent as the fiscal crisis we’re facing,” he added.

Marcos ran under the Partido Federal ng Pilipinas, which pushes for a change in the form of government towards federalism.

Pernia said such a change would be more difficult now, given the impact of the pandemic and other external factors, including the war between Russia and Ukraine.

“It’s going to be harder to do that now with an economy that’s not in good shape like it was when we were talking about federalism,” he said, referring to the administration’s first game. Duterte.

“Frankly, I don’t like federalism because… they are very unequal in terms of development, resilience and resources. It is very difficult to have different federal states or regions that are so unequal in terms of economic growth, resource base and all that,” he added.

Duterte also came forward with a platform for a move to federalism, but proposals to amend the Constitution have been unsuccessful for the past six years.

Close team

Asked about Marcos’ incoming economic team, Pernia said he was “a bit more confident” as they are expected to work consistently.

Marcos earlier announced his choice of the following members of his economics team: former budget secretary and outgoing governor of Bangko Sentral ng Pilipinas (BSP) Benjamin Diokno as finance secretary; former NEDA chief Felipe Medalla as BSP governor and San Miguel Tollways Corp chief. Manuel Bonoan as Secretary of Public Works and Highways.

He will also appoint Alfredo Pascual, former president of the University of the Philippines and president of the Philippine Management Association, as secretary of commerce and industry.

Other appointees to key budget positions, including the Department of Budget and Management, Bureau of Internal Revenue and Bureau of Customs, have yet to be announced.

According to Pernia, the choice of agriculture secretary will also be important, given the sector’s role in ensuring food sufficiency in the country.

He underscored the need for better tax administration to increase revenue collection.

“I think the best approach is to really tighten up tax administration and make sure that tax collection is done properly and that there are no tax evaders or tax leaks, no wasteful spending,” did he declare.

“Later, if it’s still not enough, maybe we should start implementing the tax measures mentioned by the DOF,” Pernia added, referring to the Finance Ministry’s proposal to introduce new taxes. to fill gaps caused by debts incurred during the period. years to deal with the pandemic.

The former NEDA chief stressed that new taxes, if imposed, must “hit the wealthier classes more than the lower income classes”.

“The tax administration is very imperfect in our country. Just improving tax administration can already generate a substantial amount of revenue,” Pernia said.

“We need better tax administration so that leakage is minimized. Those who are supposed to pay taxes should pay taxes. The problem, however, is that the new president hasn’t paid his taxes, so that’s not a good example,” he added, referring to the Marcos family inheritance tax issue.


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