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Government shares wealth with MILF

July 18, 2013

The central government of the Philippines has brokered a deal with the radical Moro Islamic Liberation Front to split revenues generated in the breakaway southern island of Mindanao.  The MILF (or “Bangsamoro”) will receive 75 percent of tax revenues, 75 percent of mining revenues, and 50 percent of fossil fuel revenues, with the central government retaining the balance.  The “crown jewel” of the agreement is that the MILF will receive their whopping cut through an automatic, annual, haggle-free grant from the central government.

It remains to be seen which taxes, such as zakat, jizya, or kharaj, the MILF may seek to impose on Mindanao residents.  The agreement is reminiscent of a truce between the government of Pakistan and militants in the tribal belt that resulted in the imposition of jizya against Sikhs in that country in 2009.

From the Philippine Star on Tuesday:

MANILA, Philippines – A wealth-sharing deal with the Moro Islamic Liberation Front (MILF) is advantageous to the country and “will stand the test of legality and constitutionality,” the chief of the government panel negotiating peace with Muslim rebels said yesterday.

In a press briefing at Malacañang, chief negotiator Miriam Coronel-Ferrer said a wealth-sharing scheme approved on Saturday was justified as it would make the envisioned Bangsamoro entity self-sustaining and progressive.

The Bangsamoro is also entitled to automatic appropriation from the central government.

Based on the agreement, the Bangsamoro entity gets 75 percent share in taxes and revenues from natural resources and metallic minerals and 50 percent from energy and other mineral resources.

Ferrer said that of all the provisions in the wealth-sharing annex, “the jewel in the crown” was the provision entitling Bangsamoro to automatic appropriation and regular release of budget.

The allocation will be in the form of an annual “block grant” from the central government similar to the internal revenue allotment (IRA) received by local government units.

“The formula for the automatic appropriation of block grant will be provided in the basic law. Many of us have not focused on this detail because much of the reporting on media have concentrated on the sharing arrangements with regard to natural resources but, as I said, this is the jewel in the crown,” Ferrer said.

At the same time, Ferrer said the agreement provided that revenues collected by the Bangsamoro from additional taxes and their share in government income from natural resources would be deducted from the annual block grants on the fourth year of the operation of the regular Bangsamoro government.

“This provision came from the MILF. It indicated that behind the haggling for more share is the intent to be less and less dependent on the national government,” Ferrer said.

“It indicated that the intention is not to get the ‘lion’s share’ for its own sake but to be able, in the future, to stand tall as a progressive and peaceful region; an equal partner of the central government in an equally peaceful and progressive country,” she said.

“This, indeed, is the true meaning of partnership – a partnership that is not based on dependency and patronage, but on the strength and capacities introduced by both for the benefit of the whole,” she added.

Ferrer said this was a unique provision because there would be automatic appropriation that would spare the region from the constraints of central budgeting process.

“I would like to say that this is a structural difference. This is not just an add-on in terms of additional percentage or whatever but this, basically, redefines the whole structure with regard to the financing of the Bangsamoro government,” Ferrer said…

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