Podcast
Questions and Answers
Which of the following is NOT a component of good fiscal management?
Which of the following is NOT a component of good fiscal management?
- Reducing mistakes in budgeting
- Restricting public officials from declaring assets (correct)
- Employing participatory governance
- Recording all fiscal transactions
What is the primary purpose of the Government Procurement Reform Act (R.A. 9184)?
What is the primary purpose of the Government Procurement Reform Act (R.A. 9184)?
- To impose stricter penalties on budget overages
- To modernize and regulate government procurement activities (correct)
- To simplify the budget preparation process
- To enhance tax collection methods
Which initiative aims to enhance the income and asset declaration system of public officials?
Which initiative aims to enhance the income and asset declaration system of public officials?
- Single Treasury Account
- Comprehensive Tax Reform Program
- Citizen Participatory Audit (correct)
- Budget Reform Act
What is one of the goals of the Comprehensive Tax Reform Program?
What is one of the goals of the Comprehensive Tax Reform Program?
What does the National Government budget represent?
What does the National Government budget represent?
Which of the following best describes the basis of taxation based on income?
Which of the following best describes the basis of taxation based on income?
What principle emphasizes the need for a tax system to have low administrative costs and compliance requirements?
What principle emphasizes the need for a tax system to have low administrative costs and compliance requirements?
In a progressive tax system, what typically happens to the tax rates as income increases?
In a progressive tax system, what typically happens to the tax rates as income increases?
Which method of taxation is primarily focused on individuals' spending habits?
Which method of taxation is primarily focused on individuals' spending habits?
What does the principle of fairness in taxation require?
What does the principle of fairness in taxation require?
What does tax incidence depend on?
What does tax incidence depend on?
How does industry structure impact tax incidence?
How does industry structure impact tax incidence?
What role does general equilibrium analysis play in understanding tax incidence?
What role does general equilibrium analysis play in understanding tax incidence?
What is an example of a market that can be affected by a tax on consumption?
What is an example of a market that can be affected by a tax on consumption?
What is the purpose of cost and benefit analysis in assessing taxes?
What is the purpose of cost and benefit analysis in assessing taxes?
What principle does vertical equity assert about individuals' taxation?
What principle does vertical equity assert about individuals' taxation?
What is a significant problem associated with implementing vertical equity in tax systems?
What is a significant problem associated with implementing vertical equity in tax systems?
Which tax is specifically levied on the transfer of wealth after an individual’s death?
Which tax is specifically levied on the transfer of wealth after an individual’s death?
Which of the following is NOT cited as a criticism of income-based taxation?
Which of the following is NOT cited as a criticism of income-based taxation?
Which factor contributes to the complexity of income tax systems?
Which factor contributes to the complexity of income tax systems?
Flashcards
Taxation
Taxation
The power of a government to impose financial burdens on individuals and property to raise revenue for public expenses.
Progressive Tax System
Progressive Tax System
A tax system where individuals with higher incomes pay a larger percentage of their earnings in taxes.
Income Tax
Income Tax
Taxes are levied on the earnings of individuals or entities during a specific period, usually a year. This includes salaries, profits, interest, dividends, and rental income.
Consumption Tax
Consumption Tax
Taxes are based on the consumption of goods and services, rather than income. Examples include sales taxes, value-added taxes (VAT), and excise taxes.
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Lifetime Income Tax
Lifetime Income Tax
Taxes are based on an individual's total lifetime earnings, not just their annual income or consumption.
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Horizontal Equity
Horizontal Equity
Individuals with similar financial situations should pay the same amount of tax.
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Vertical Equity
Vertical Equity
Individuals with higher incomes should pay a larger proportion of their income in taxes.
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Wealth Taxes
Wealth Taxes
Taxes levied on the total value of an individual's assets, reflecting accumulated lifetime income.
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Estate or Inheritance Taxes
Estate or Inheritance Taxes
Taxes applied to the transfer of wealth upon death, typically paid by inheritors.
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Fairness in Taxation
Fairness in Taxation
The concept that taxes should be levied on those with greater ability to pay, encouraging long-term wealth generation.
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What is Good Fiscal Management?
What is Good Fiscal Management?
Good fiscal management involves maintaining a system of checks and balances when recording financial transactions. This helps reduce errors and prevents surprises like unexpected budget deficits.
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What is the Government Procurement Reform Act (R.A. 9184)?
What is the Government Procurement Reform Act (R.A. 9184)?
This law outlines rules and regulations for modernizing and standardizing government procurement practices in the Philippines.
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What is the Financing Program?
What is the Financing Program?
This program includes the projected income from existing and new revenue sources, as well as planned borrowings to finance government operations and debt payments.
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What is the Comprehensive Tax Reform Program?
What is the Comprehensive Tax Reform Program?
A comprehensive overhaul of the tax system designed to simplify procedures, ensure fairness, and boost efficiency.
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What is the Budget Reform Act?
What is the Budget Reform Act?
This act focuses on strengthening the institutions, mechanisms, and processes involved in budget planning, approval, execution, and accountability for government spending.
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Tax Incidence
Tax Incidence
The distribution of the tax burden between consumers and producers, determined by the relative responsiveness of supply and demand to price changes.
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Elasticity of Supply and Demand
Elasticity of Supply and Demand
The degree to which the quantity supplied or demanded changes in response to a change in price. Elastic means a large change, inelastic means a small change.
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Oligopoly and Tax Incidence
Oligopoly and Tax Incidence
When firms in an oligopoly (few firms) expect each other to match price increases following a tax, they all raise prices, shifting the tax burden onto consumers.
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General Equilibrium Analysis of Tax Incidence
General Equilibrium Analysis of Tax Incidence
The analysis of how taxes affect multiple interconnected markets, considering feedback loops and spillover effects.
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Cost Benefit Analysis
Cost Benefit Analysis
A systematic approach to assessing the relative advantages (benefits) and disadvantages (costs) of an activity, including non-monetary factors like environmental impact.
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Introduction to Taxation
- Taxation is the inherent power of a sovereign state to impose financial burdens on individuals and property.
- It's used to fund government expenses.
Principles of Taxation
- Efficiency: The tax system should not distort economic activity.
- Administrative Simplicity: The tax system should have low administrative costs and be easy to comply with.
- Flexibility: The tax system should adapt to changing circumstances.
- Political Responsibility: The tax system should be transparent.
- Fairness: The tax system should be fair, treating similar individuals the same and imposing higher taxes on those who can afford them.
- Horizontal Equity: Individuals in the same circumstances should pay the same amount.
- Vertical Equity: Individuals in a better position to pay should pay higher taxes.
- Problems of Fairness: Defining who should pay at higher rates, implementing the principles, and deciding how much more higher-earning individuals should contribute.
Income as a Basis of Taxation
- Income-based taxation is based on an individual's earnings over a specific period, typically a year.
- Income includes wages, salaries, business profits, interest, dividends, and rental income.
- Governments compute taxes based on a taxpayer's income, applying different tax rates in different income brackets.
- A progressive tax system assigns higher rates to higher earners.
Consumption as a Basis of Taxation
- Consumption-based taxation is based on spending, not income.
- Taxes are levied when goods and services are purchased.
- Common forms include sales taxes, value-added taxes (VAT), and excise taxes.
Lifetime Income as a Basis of Taxation
- Lifetime income-based taxation considers an individual's total earnings throughout their lifetime.
- It's an alternative to annual income or consumption-based taxation.
- Wealth taxes and estate/inheritance taxes are forms of lifetime income taxation.
- Wealth taxes assess total assets, while estate/inheritance taxes apply upon death.
Summary of Taxation
- Income-based Taxation: Fair, progressive but complex and prone to evasion. Examples: Income tax, corporate tax.
- Consumption-based Taxation: Simple, stable revenue. Examples: Sales tax, VAT, excise tax.
- Lifetime Income-based Taxation: Fair over the long term but hard to track. Examples: Wealth tax, inheritance tax.
Criticisms of Income-Based Taxation
- Complexity and Administrative Burden: Tax systems often involve intricate rules and numerous deductions which increases administrative cost for taxpayers and governments.
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