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The Impact of Decentralization in Northern Mindanao


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The content of the video is the presentation made by Mr. Philip Camara during the thematic forum in Cagayan de Oro, May 14, 2011.

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The Impact of Decentralization in Northern Mindanao

  2. 2. Net of IRA of P146,591.95 million **Inclusive of IRA of P146,591.95 million Sources: Philippine Commission on Audit 2007 Financial Reports; National Bureau of Statistics of China Comparative Philippine and China Central and Local Government Share in Revenue and Expenditure The Philippines (2007; in Million Pesos ) China (2004 ; 100M Yuan ) Central* Local** Central Local Revenue 1,096,875 234,760 14,503 11,893 % to Total 82.37% 17.63% 54.90% 45.10% Expenditure 1,029,377 194,736 7,894 20,592 % to Total 84.09% 15.91% 27.70% 72.30%
  3. 3. Philippine Central and Local Government Revenue Breakdown (in percent) * Central-Net of IRA Source: Philippine Commission on Audit 2007 Financial Reports Central Local T otal Revenue 82.37% 17.63% Tax Revenue* 93.08% 6.92% General Income Permits and Licenses 77.03% 22.97% Service Income 94.24% 5.76% Business Income 68.65% 31.35% Other Income 94.65% 5.35% Gain on Forex 100.00% 0.00%
  4. 4. Sources: Country Report-United Nations Economic and Social Commission for Asia and the Pacific; Philippine Local Government Code General Functions of Local Governments The Philippines <ul><li>Run the Health and Social Welfare Systems </li></ul><ul><li>Provide Agricultural and Fishery Support </li></ul><ul><li>Solid Waste Management </li></ul><ul><li>Local Business Development </li></ul><ul><li>Small Infrastructure Construction and Development </li></ul><ul><li>Tourism Development </li></ul><ul><li>Social Forestry / Mining </li></ul>
  5. 5. Local Government Revenue Sources Sources: Country Reports China and the Philippines-United Nations Economic and Social Commission for Asia and the Pacific The Philippines <ul><li>Local Taxes such as: </li></ul><ul><li>Business Tax </li></ul><ul><li>Real Property Tax </li></ul><ul><li>Transfer Tax </li></ul><ul><li>Franchise Tax </li></ul><ul><li>Printing and Publication Tax </li></ul><ul><li>Amusement Tax </li></ul><ul><li>Community Tax </li></ul><ul><li>Share in National Taxes </li></ul><ul><li>Internal revenue Allotment (IRA) representing 40% of internal revenue collections based on the third preceding year (Regional distribution is as follows: Provinces 23%; Cities 23%; Municipalities 34%; and Barangays 20% </li></ul><ul><li>Non-Tax Revenue </li></ul><ul><li>Share in national wealth exploitation in their area </li></ul><ul><li>Share in the earnings of government agencies or government-owned or controlled corporations engaged in the utilization and development of national wealth in their area based on the following: 1% of the gross sales or receipts of the preceding calendar year or 40% of mining taxes, royalties, forestry or fishery charges and such other taxes, fees or charges including related surcharges, interests, or fines, whichever is higher </li></ul>
  6. 6. United States : Sources of State Revenue Source: Tax Foundation Report : Source Percentage (US Average) General Sales Tax 23.5% Selective Sales Tax 10.9% Property Taxes 30.1% License and Other Fees 8.2% Corporate Income Taxes 4.7% Individual Income Taxes 22.6%
  7. 7. LGU Income Generation <ul><li>Region X - Northern Mindanao Php Millions </li></ul><ul><li>Total Province Cities Towns </li></ul><ul><li>9,236 2,462 3,691 3,082 2006 </li></ul><ul><li>11,072 2,913 4,570 3,588 2007 </li></ul><ul><li>20% Growth Mostly due to IRA </li></ul><ul><li>IRA Dependency in 2006 = 82.6% </li></ul><ul><li>IRA Dependency in 2007 = 90.9% </li></ul>
  8. 8. <ul><li>Dr. Gilbert Llanto : “LGU fiscal autonomy is constrained because the LGC limits the power of LGUs to set local tax rates and preserves the more revenue productive taxes in favor of the central government.” </li></ul>LGC ‘91 Fiscal Constraints
  9. 9. Philippine LGU Total Income vs Central Govt. Expenditure per Region *Inclusive of IRA Source: Figures are from the Philippine Commission on Audit 2007 Financial Reports Local Government Total* Central Central   P000 Income Government Government   Expenditure Expenditure   % to LG Total       Income Grand Total 234,642,572.58 762,534,007.59 324.98% National Capital Region 46,778,401.48 560,070,716.35 1197.28% Region 1 11,410,059.53 14,371,248.27 125.95% CAR 6,223,710.33 7,499,513.73 120.50% Region 2 9,160,569.36 10,132,758.94 110.61% Region 3 20,888,920.59 21,590,013.29 103.36% Region 4 35,866,590.31 27,646,932.60 77.08% Region 5 10,993,973.34 15,101,341.54 137.36% Region 6 16,679,840.96 18,419,954.59 110.43% Region 7 15,555,455.12 14,027,680.75 90.18% Region 8 8,687,321.73 98,317,599.17 1131.74% Region 9 7,781,531.08 9,821,773.23 126.22% Region 10 11,300,406.23 11,512,490.21 101.88% Region 11 10,170,596.06 10,980,183.03 107.96% Region 12 8,285,249.49 8,623,777.18 104.09% Region 13 7,545,245.07 7,146,537.05 94.72% ARMM 7,354,701.68 8,753,883.18 119.02%
  10. 10. If A Federal State… <ul><li>And with a Tax Effort of Efficiency of just 15%.. </li></ul><ul><li>Total Region 10 Government Revenues would amount to P58 Billion… </li></ul><ul><li>200% higher than what it is today </li></ul>
  11. 12. GROSS NORTHERN MINDANAO DOMESTIC PRODUCT <ul><li>Current Prices, in Millions of Pesos </li></ul><ul><li>2000 2003 2006 2010 </li></ul><ul><li>  </li></ul><ul><li>124,524 197,101 277,269 389,624 </li></ul>
  12. 13. Northern Mindanao Econ Sectors <ul><li>The almost-even distribution of the region’s economy among its major sectors may be considered by most economists to be almost ideal However, with the interrelation of the three (3) main subsectors (agriculture and fishery, manufacturing and trade) that may be deemed to be the pillars of the region’s economy, in the sense that agriculture provides the inputs to a significant part of the region’s manufacturing and, further, a significant part of the region’s trade depends on manufacturing. </li></ul><ul><li>LINNITO M. PASCUAL </li></ul>
  13. 14. Top Manufacturing Outfits in Northern Mindanao <ul><li>Asia Brewery, </li></ul><ul><li>CATIMCO, </li></ul><ul><li>Coca-Cola, </li></ul><ul><li>Del Monte Phils., </li></ul><ul><li>LKKS Manufacturing, </li></ul><ul><li>Nestle Phils., </li></ul><ul><li>Phil Agro, </li></ul><ul><li>PICMW, Pilipinas </li></ul><ul><li>Kao, </li></ul><ul><li>RI Chemicals, </li></ul><ul><li>Mindanao Silicon, </li></ul><ul><li>STEAG State Power Inc </li></ul><ul><li>Elegant Chemical Alloy </li></ul>
  14. 15. AVERAGE FAMILY INCOME IN NORTHERN MINDANAO <ul><li>IN YEAR 2000 CONSTANT PRICES </li></ul><ul><li>  2006 2009 </li></ul><ul><li>102,000 98,000 </li></ul><ul><li>Poverty rate of Population in 2006: 43% </li></ul>
  15. 16. PHILIPPINES <ul><li>INCOME BRACKET 2001 (%) 2010 (%) </li></ul><ul><li>Class AB 2 2 </li></ul><ul><li>Class C 18 12 </li></ul><ul><li>Class D 56 64 </li></ul><ul><li>Class E 24 23 </li></ul><ul><li>Despite the best years of GDP growth! </li></ul>
  16. 17. VIETNAM <ul><li>INCOME BRACKET 1999 (%) 2010 (%) </li></ul><ul><li>Class AB 7 21 </li></ul><ul><li>Class CD 31 55 </li></ul><ul><li>Class EF 62 24 </li></ul>
  18. 19. GDP INDICATORS <ul><li>COMPUTING PROGRESS FROM </li></ul><ul><li>CORPORATE ACCOUNTS </li></ul>
  19. 20. WANTED! <ul><li>A change of crew </li></ul><ul><li>& a direction. </li></ul>
  20. 21. Change. <ul><li>From superiority to subsidiarity. </li></ul><ul><li>From pinatulo to pinatubo. </li></ul>
  21. 22. GDP = NATIONAL INCOME in the Philippines <ul><li>Pinatulo </li></ul><ul><li>Land, labor , capital = enterprise </li></ul><ul><li>Enterprise ++ = industry </li></ul><ul><li>Industry++ = sector </li></ul><ul><li>Sector++ = National Economy </li></ul><ul><li>Pinatubo </li></ul><ul><li>Environment, households, Man-made assets = community income </li></ul><ul><li>Community++ = towns / cities </li></ul><ul><li>Towns/ / Cities = Regions & Provinces </li></ul><ul><li>Regions ++ = National Economy </li></ul>
  22. 23. Filipino dignity. <ul><li>Restoring </li></ul>
  23. 25. Subsidiarity starts with the Individual <ul><li>A STATE EXISTS SO THAT A NATION’S CHILDREN MAY GROW UP WITH DIGNITY </li></ul>
  24. 26. Subsidiarity’s Unit of Org is the HH
  25. 27. Then from HH to Community
  26. 28. Sources: Wikipedia; National Statistical Coordination Board; Country Reports-United Nations Economic and Social Commission for Asia and the Pacific *Under the National Government Administrative Divisions The Philippines <ul><li>Regions (17)* </li></ul><ul><li>Provinces (80) /Cities(120) </li></ul><ul><li>Districts (219)* </li></ul><ul><li>Towns (1,514) </li></ul><ul><li>Villages (Barangays) (46,000) 1,956 people per village </li></ul>
  27. 29. Trickle Down System <ul><li>Or PINATULO has been around with us since the colonial period… </li></ul><ul><li>Independence merely Filipinized it but it is still Trickle Down or the Superiority Model… </li></ul><ul><li>Only substantial change is the shift towards Pinatubo or Subsidiarity </li></ul><ul><li>It is the SYSTEM that is incompetent, not the Filipi no </li></ul>
  28. 30. EXECUTIVE VISION OF THE 1987 CONSTITUTION <ul><li>Section 14. The President shall provide for regional development councils or other similar bodies composed of local government officials, regional heads of departments and other government offices, and representatives from non-governmental organizations within the regions for purposes of administrative decentralization to strengthen the autonomy of the units therein and to accelerate the economic and social growth and development of the units in the region. </li></ul>
  29. 31. <ul><li>Its membership is 75% from government sector which includes, elected officials like Governor, Mayor, etc. and regional line agencies like the DPWH, DOH, etc.     25% is private sector which includes NGOs, POs, and other private sectors. </li></ul>MEMBERS OF THE RDC
  30. 32. <ul><li>1. Directly Supervise BIR Agencies in area </li></ul><ul><li>2. Directly Retain Rev. Collections w/in IRA </li></ul><ul><li>3. Strictly Enforce People’s Participation and </li></ul><ul><li>“ bottom-up” Planning of LGC </li></ul><ul><li>4. Enforce E-Comm Law having all LGUs </li></ul><ul><li>display in LGU websites: budgets / expens </li></ul><ul><li>5. Directly Supervise all PNP units </li></ul><ul><li>6. Ensure Prep of Land Use, Sus Dev. Plans </li></ul><ul><li>7. Directly Supervise Reg. Line Agencies </li></ul>PRESIDENTIAL AUTHORIZATIONS TO 17 RDCs
  31. 33. <ul><li>Subsidiarity of the State </li></ul><ul><li>Solidarity of Society </li></ul><ul><li>Individual Responsibility for achievement </li></ul><ul><li>All three must inform DECENTRALIZATION if it is to result in the balanced socio-economic development of the Philippines </li></ul>Social Market Economy Frame