Federalism is not a solution (2)

Last of two parts

Even when the architects of Federalism allow each state to impose income tax on income earned in its territory and collect the VAT on value added to economic goods sold in the state, I anticipate that these three regions will collect more than half of the total tax revenue of Federal Philippines. This is so because the distribution of GDP shown above is highly indicative of the volume of taxable economic activities in each region. As such, it is very likely that post-Federalism, transfers, or more descriptively, subsidies, will have to be made from some states to the others. Additionally, there is still the question of how the central government will get its own share of revenue and what proportion of total revenue that share would be.