Press Release
August 8, 2018

Transcript of Interview with Senate Minority Leader Franklin M. Drilon

SFMD: The Supreme Court, according to the calculation of the economic managers, would cost the national government nearlyP200 billion in additional budget for next year. Therefore, there is a concern that such an increase could increase our deficit from 3% to 4%. So, one of the remedies that they are looking at is to declare an unmanageable public sector fiscal deficit. Therefore, they will reduce the IRA from the present 40% to something lower but not less than 30%. This is allowed under Section 284 of the Local Government Code.

Q: Ang sabi ni Secretary hindi naman daw maapektuhan in terms of absolute amount?

SFMD: Because mas mataas ang base. Kaya ang sinasabi niya, in terms of absolute amount hindi maapektuhan but in terms of the loss of potential increase, that will happen. They are looking at Section 284 of the Local Government Code, which states that, "in the event that the national government incurs an unmanageable public sector deficit, the President of the Philippines is hereby authorized, upon the recommendation of Secretary of Finance, Secretary of Interior and Local Government and Secretary of Budget and Management, and subject to consultation with the presiding officers of both Houses of Congress and the presidents of the "liga", to make the necessary adjustments in the internal revenue allotment of local government units but in no case shall the allotment be less than thirty percent (30%) of the collection of national internal revenue taxes of the third fiscal year preceding the current fiscal year."

Q: Do you foresee protest in the LGUs?

SFMD: Yes, certainly. I would appeal to the executive not to declare an unmanageable fiscal deficit in order to address this potential expense of P200 billion. It is manageable. We just have to look at the entire budget and see where we can source the P200 billion additional amount. I'm sure we can find. Look at the intelligence funds.

Q: Will you advise na tanggapin na nila ito tutal malabo namang mabago yung Mandanas case?

SFMD: I will not second-guess them. There are certain issues that they want to be clarified. But as a lawyer, my view is, just on the substantive aspect, meaning as to the main issue as to what you will include in terms of the computation of the IRA, I think it is very difficult to reverse that. The issue is the amount collected by the Bureau of Customs in behalf of the BIR. The VAT for example, the ones collected by the BoC is not included in the IRA. That's basically the complaint of now Governor Mandanas.

Q: Ano, basically, yung mag-sa-suffer?

SFMD: The LGUs. The reduction of the IRA will hit the LGUs and the projects of the LGUs, the personnel and the salaries.

Q: Yung sinasabi ni Sec. Dominguez na "quits" lang tutal malaki naman yung base. Katanggap-tanggap ba yun?

SFMD: Hindi. I would not agree with that. Actually, the LGUs have their own plans. They have scheduled how to use these increases in the IRA.

Q: Declaring an unmanageable deficit will not send wrong signals to credit rating agencies?

SFMD: Very wrong signal. I think it's equivalent to cutting the head of one if he has a headache.

Q: Are they using that just to circumvent the law?

SFMD: No, that is a power available to them under the Local Government Code. But I strongly advise against using that power.

Q: Yung kanina, they also raised their concerns about federalism?

SFMD: Yes. It's very clear that the economic managers are not in favor of federalism. I asked them a direct question, if the constitutional commission report is the one approved and is presented in a plebiscite, would you vote for it? They said unanimously, "no." They will not vote for it because they said the report is confusing. The present draft does not allow financial analysis. They could not just figure out how much it will cause because it is "confusing." That's the word they used. So from the economic point of view, it is simply not viable for us to adopt that Constitution drafted by the Puno commission.

Q: Will it affect local government and popular support once babaan yung IRA?

SFMD: Certainly, the local governments will be affected and the constituency being serviced by the LGUs will suffer.

Q: That puts to rest the issue of federalism here...

SFMD: That adds additional nail to the coffin called federalism.

Q: Do you support the lowering of tariff on fish, vegetable?

SFMD: Well if it results in the objective which is to help arresting inflation, yes, we support that. But the tarrification on rice is a very sensitive issue. Mag-ingat sila diyan kasi maapektuhan yung ating mga magsasaka. The income of the farmers will be affected.

Q: Doon sa Train 2 filed by Senator Sotto, may provisions doon removing the exemptions of education institutions and hospitals?

SFMD: I haven't read I yet.

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