Divided we stand?
By Carl Angelo Cabusas
DECENTRALIZATION. Federalism. The Balik Probinsya program. These are some things we always hear from President Rodrigo Duterte. Probably among the biggest items in his development plan for the Philippines, the goal is to empower other regions of the country by shifting major investments, businesses and opportunities from Metro Manila. Implemented correctly, these are supposed to solve many issues such as overpopulation, traffic and disparities in the distribution of wealth.
Decentralization is not an entirely new concept. It has been around for ages, and in fact, is the focal point in the implementation of the Local Government Code of 1991. This goal is a gargantuan task but the ball will finally start rolling toward fulfillment. Successful implementation will happen through an accumulation of efforts from multiple stakeholders in both the public and private sectors. Various government departments will move in unison toward full devolution to local government units (LGUs). In this light, the Bureau of Internal Revenue (BIR) has issued Revenue Memorandum Circular 84-2021, which circularizes Executive Order (EO) 138.
EO 138, entitled "Full Devolution of Certain Functions of the Executive Branch to Local Governments, Creation of a Committee on Devolution, and for Other Purposes," is a directive from the President to constituents regarding preparations for increased autonomy to be enjoyed by LGUs. Its provisions are:
1) Devolution pertains to the act by which the national government, as may be allowed by existing laws, confers power and authority to the various LGUs to perform specific functions and responsibilities.
2) Full devolution of services and facilities should be completed by the end of fiscal year 2024.
3) Concerned national government agencies and all LGUs should prepare Devolution Transition Plans that conform to guidelines to be jointly issued by the Budget and Interior departments.
4) Formation of committee on devolution.
5) Provision for a growth equity fund.
6) To the extent authorized by civil service laws, rules and regulations, personnel hired on a permanent basis who may be affected by devolution can:
• Apply for transfer to other units/offices within the department/agency/GOCC (government-owned
or -controlled corporation) concerned without reduction in pay;
• Apply for transfer to other departments/agencies/GOCCs in the executive branch without
reduction in pay; or
• Avail of retirement benefits and separation incentives then apply for vacant positions to be
later on considered as new hires upon reemployment.
Decentralization can both be a boon and bane but when done well it is bound to generally improve the lives of Filipinos.
With regard to the implementation and responsiveness of government projects to local needs, there will be an improvement in terms of speed due to the availability of funds at the local level as well as the devolution of powers from the national government to local leaders.
For health care, funds will be more accessible to local hospitals and clinics through the mobilization of locally collected funds. More funds will be available to more developed LGUs while for some developing LGUs, the growth equity fund will provide a sustainable source for health care financing needs.
In the area of services and jobs, more professionals will be needed locally due to rising demand brought about by devolution. We can expect that in the future, more jobs will be available in each locality.
Regarding business, devolution could bring competitive advantages to some LGUs. Businesses may choose to put their investments and start-ups in LGUs that are progressing well. A bigger LGU in terms of population, income per capita, and taxes will probably have more money for subsidies and support to investors. This might pose a challenge to smaller LGUs but hopefully the national government will implement a mechanism to counter this. A combination of tourism campaigns, incentives, subsidies and other projects could level the playing field.
In terms of politics, local leaders, lawmakers and citizens alike will have a new playground. The challenge here involves implementing checks and balances set by the national government without jeopardizing the autonomy aimed for under decentralization. At the national level, meanwhile, devolution will help leaders focus on projects that involve the welfare and economic development of the country as a whole.
For the accounting profession, decentralization presents a new challenge. Government accounting will need to adapt. Challenges will also be encountered by both private and public accountants. These include varying LGU requirements for establishing businesses and obtaining/renewing permits, licenses and/or certifications. The BIR and Securities and Exchange Commission, two of the biggest regulators of businesses, will also take part in devolution. This could mean more issuances from these institutions and it may be possible to have issuances specific to each LGU as may be allowed under the law. But since more revenue from taxes will be allocated to the collecting LGU, this could also trigger the delegation of reviewing, approving and denying certain transactions to local officials. This will shorten processing times for lots of transactions, improving the quality and speed of services accountants can provide to clients.
Devolution has a huge potential to improve the country's economic condition. However, this will be heavily reliant on the Committee on Devolution and the degree of participation stakeholders bring to the table. Also, will this lay the foundation for the federalized system of government that President Duterte has set as a goal? We should not be bystanders in this era of change. Rather, we must actively participate in discussions that involve the evolution and progress of our nation. Watching from the sidelines may be easy and fun but life is meant to be thrilling and action-packed. Hop in. Game on!
Carl Angelo C. Cabusas, s the audit and digital transformation director of Paguio, Dumayas & Associates, CPAs (PrimeGlobal Philippines),
an institutional member of the Association of CPAs in Public Practice (Acpapp). The opinion of the writer does not
reflect in any way the opinion of these institutions.