Pimentel to explain 20/80 federal solution

Once the federal system of government is impelemented, for this year Negros Oriental would stand to receive more than one billion pesos as its share from the collection of national taxes.
Senator minority leader Aquilino 'Nene' Q. Pimentel, Jr. will explain the important implications of adoption of a federal form of government in the country during his visit to Dumaguete City on August 14.
The most significant benefit derived from the adoption of a federal government is the drastic increase in the shares by local government in the collection of national taxes.
Under the model that is being pushed by the senator, there wil be a 20-80 sharing scheme between the federal government and the proposed federal states.
Pimentel is scheduled to speak before students, and local officials at the Negros Oriental State University when he arrives from a morning flight from Manila on Thursday.
He is also going to speak before the league of municipalities in Amlan.
The shares of local government units (LGUs) in the collection of national taxes shall substantially increase – many by as much as 30 percent – under the federal system being proposed by a majority of senators, according to Senator Pimentel.
As provided for in Joint Senate Resolution 10 calling for the adoption of a federal system, all revenues and taxes collected by the LGUs or by the national government shall be divided in the following manner: 20 percent shall accrue to the federal government and 80 percent to the federal states.
Of the share accruing to the federal states, 30 percent shall go to the state concerned and 70 percent shall be apportioned among the provinces, cities, municipalities and barangays, according to the formula prescribed under the Local Government Code of 1991.
Pimentel, principal author of Senate Joint Resolution 10, explained that the shares of LGUs defined under the Code, will get much bigger under the proposal because the funds to be apportioned shall include all revenues and taxes imposed or collected by the federal government.
“That means that monies like customs duties and the collections of seaports will now be included in the revenues to be divided among the federal government, the states and the provinces, cities, municipalities and barangays,” he said.
Under the present system, Pimentel pointed out that “only taxes as taxes strictly construed are subjected to division between the central government and LGUs.”
In the case of Negros Oriental, the province's share for 2008 out of collections from the Bureau of Internal Revenue (BIR), amounts to P801,711,407.02.
But under the federal system's sharing scheme, the share for Negros Oriental will rise to P1,122,395,969.82.
There will be an increase of P320-million to the province's share in the national taxes, under the proposed sharing scheme in the federal system.
This is a thirty-nine percent increase from Negros Oriental's current share
For Dumaguete City, the share for 2008 out of BIR collections amounts to P187,778,810.56.
Under the federal system, the share for Dumaguete City would be P262,890,334.77.
There would be an increse of P75,111,524.22 for DUamguete share in the national taxes.