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1. Finance - It is the management of money 2. Public revenue includes all income and and other valuables that can easily be receipts, regardless of source and nature, converted into cash. which the government obtains during...

1. Finance - It is the management of money 2. Public revenue includes all income and and other valuables that can easily be receipts, regardless of source and nature, converted into cash. which the government obtains during any 2. Public Finance - It is the study of activities given period. The primary source of public of government, which may contain revenues, revenue is taxation. disbursements, taxation, surplus and deficits. 3. Public debt refers to any notes, bonds, or 3. Political Economy - It is a study of loans acquired by the governmental entity. philosophy and ideology that studies the This debt can be short term or long term at evolution of political and economic ideas. the discretion of the governmental entity 4. Political Equilibrium - It is an agreement on the production level of one or more public Max Weber (1864-1920) was a German economist, goods, given the specified rule for making the philosopher, and sociologist noted for his studies on collective choice and the distribution of tax the modern state. Weber defined the modern state shares among individuals. as a community that successfully claims a monopoly 5. Public Policy - It is the process by which over violence within a geographical area, which governments translate their political vision requires it to have legitimate and legal authority. into programs and actions to deliver ‘outcomes— desired changes in the real The following are examples of different types of world. policies: 6. Fiscal Policy - It is the measurement used by governments to stabilize the economy, 1. Reactive policy - emerges in response to a purposely by controlling the levels and taxes concern or crisis from the internal or external distribution and expenditures of the environments by determining problems and government. concerns, responding to media attention 7. Public Expenditure - These are expenses (generally adverse) reacting to crises or incurred by the government for its own emergencies. maintenance and also for the preservation 2. The proactive policy - Identifying potential and welfare of the society and economy as a issues and factors that could affect the whole. organization, predicting and preparing to 8. Expansionary fiscal policy - It occurs when mitigate contingency through planning, Congress acts to cut tax rates or increase strategic management risk, and management government spending, shifting the aggregate criteria selection priority making. demand curve to the right. 3. The substantive policy - concerned with the 9. Contractionary fiscal policy - It occurs legislation, programs, and practices that when Congress raises tax rates or cuts govern the substantive (content) of what the government spending, shifting aggregate community needs. It is about particular and demand to the left. specific issues - what the government does. 10. Economic Activity - It is any action that 4. The vertical policy - is the standard, or involves the development, production, traditional way wherein policy decisions are transfer, or consumption of goods or capital. created. It is established within a single 11. Purchasing power - It is the financial organizational structure and generally starts capability to purchase products and services, with a broad overarching policy, sometimes the value of an amount of money. called "corporate" or "framework" policy. 12. Free Market - It is an economic system in 5. Horizontal policy-making - referred to as which prices are determined by unrestricted integrated policy, is developed by two or competition between privately owned more organizations, each of which has the businesses. authority or ability to deal with only a part of 13. Wage-Price Spiral - It is a macroeconomic the situation. theory explaining the cause-and-effect connection between increasing wages and Fiscal policy in the Philippines is characterized by increasing prices termed as inflation. non-stop and increasing levels of debt and budget deficits, but improvements have still improved in the There are three(3) parts of public finance: last few years. 1. Public Expenditures In general, the goals of fiscal policy in a developing 2. Public Revenues economy are as follows: 3. Public Debt 1. Full Employment: It is the primary purpose 1. Public expenditures refer to expenses of fiscal policy in an emerging economy, to incurred by the government for maintenance. attain and sustain full employment in the Also for the preservation and welfare of the economy. society and economy as a whole. ○ Prof. Keynes, a British economist, indicated the following proposals to  attain full employment in the economic cycles – economic booms and economy: (a) Take the extreme recession. Lost output and higher financial ability to buy products and unemployment can be a result of the services termed as purchasing power recession. and restrain disbursements by the 6. Inequality and Poverty Reduction - In private sector; (b) Offset the deficit in capitalism, which is an economic system private financing through public where private persons or business entities financing; (c) Lessen rates of interest own capital goods, an increase in inequality to invite additional business persons. and poverty can be seen. 2. Price Stability: A general arrangement is made that economic growth and stability are Terminologies joint objectives in under-developed countries. 1. Governance. It refers to a process whereby However, in emerging countries, volatility of groups in society exercise power, authority, the economy is stated as inflation. and influence and legislate policies and 3. To Accelerate the Economic Growth Rate: decisions regarding public life and social Mainly, fiscal policy in an emerging economy upliftment. must have a goal of achieving faster 2. Executive Power. The power exercised by economic growth rate. the government under the leadership of the 4. Optimal Distribution of Resources: President. Economic activities as public expenditure 3. Legislative Power. The power vested to a programs and taxation considerably affects deliberative assembly having an authority to the distribution of funds in different jobs and make laws for a political entity such as a segments of society. country or city. 5. Fair Allocation of Income and Wealth: So, 4. Judicial Power. The power vested upon the allocated expenditure should help economic judiciary the system of courts that interprets progress and growth aiding reallocation. and applies it in legal cases. 6. Economic Stability: In a broader context, 5. Terms of Office. It is the length of time a fiscal activities support stability of the person serves in a particular elected office. economy as to the aspect of short-run 6. Culpable Violation of the Constitution - It international cyclical fluctuations. is defined as an intentional and illegal breach 7. Capital Formation and Growth: For the of the Constitution. Treason. A Filipino advancement of the maximum viable capital citizen levies war against the Republic of the formation rate, capital adopts a significant Philippines or obeys to his/her enemies, position in any growing movement in a providing aid or relief in the Philippine country, and fiscal policy may be accepted as territory or elsewhere. a critical measure. 7. Bribery is defined in two forms in the 8. To Encourage Investment: Fiscal policy Revised Penal Code: likewise targets to support the rate of a. Direct bribery. When any public investment in the public and private sector of officer shall agree to perform an act the economy. constituting a crime, in consideration of any offer, gift, personally or Major Roles of the Government through the mediation of another." b. Indirect bribery. An act when a 1. Private Property Protection and National public officer accepts gifts offered Security - The government’s role is to because of his office. assure basic law and order by protecting the 8. Graft and Corruption. Violation of the R.A. rule of law. No. 3019 or otherwise known as the 2. Tax Increases - Government should Anti-Graft and Corrupt Practices Act. It increase taxes for public goods and public commits graft and corruption and is an services provided to its citizenry. impeachable offense when a public official 3. Public Services Provision - In other words, has been found to have acquired, whether, in the government should provide these goods his name or other person's name, a value of and services. Examples of public products assets or amount of money not proportionate include street lighting, infrastructures like with his salary. public school buildings, public hospitals, 9. Betrayal of Trust. It also refers to the highways and bridges, law and order. betrayal of public interest, inexcusable 4. Market Regulations - The government may negligence of duty, tyrannical abuse of need to control the power to monopolize, like power, the prejudice of public interest and prohibiting mergers of companies or setting which tend to bring the office into disrepute. price limits in natural monopolies by industries like tap water and electricity. EXECUTIVE BRANCH 5. Management of Macroeconomic - 1. The Power to Implement Laws Capitalist economies can be exposed to  2. Administrative power and control over Vice President - 2 consecutive terms angencies of the governments. allowed with 6 years per term. 3. The power to commute sentence, grant Legislative Department pardon, reprieve and amnesty. Senate - 2 consecutive terms allowed with 6 4. The power to declare martial law years per term. 5. The power to veto a law District and Party Representatives - 3 consecutive terms allowed with 3 years per Qualifications of the President term Natural-born citizen of the Philippines Judicial Department Registered Voter No Term Limit - but they mandated to hold Able to read and write office during good behavior until they reach At Least 40 years old of age on the day of the age of 70 or become incapacitated to the election discharge the duties of the office. A resident of the Philippines for at least 10 years OFFICIALS REMOVABLE BY IMPEACHMENT 1. The President and the Vice President LEGISLATIVE BRANCH 2. The Members of the Supreme Court 1. Power to Enact Laws 3. The Members of the Constitutional 2. The power to choose who shall become Commission President in case of tie 4. The Ombudsman 3. The power to impose death penalty 4. The power to act as a constituent assembly Impeachment - Defined as a method of national 5. The power to declare the existence of war inquest into the conduct of public men 6. The power to impeach Purpose of impeachment - To protect the people from official delinquencies of malfeasances Qualifications of the Officials of the Legislative Branch Grounds for Impeachment Senators Culpable Violation of the Constitution A natural-born citizen of the Philippines Treason At least 35 years of age on the day of the Bribery election Graft and Corruption Able to read and write Betrayal of Public Trust A registered voter Other High Crimes A resident of the Philippines for not less than 2 years The Principle of Separation of Powers - Under the House of Representatives principle of co-equal and coordinate powers of the A natural-born citizen of the Philippines three (3) branches, officials delegated with each of At least 25 years of age on the day of the the authorities are not permitted to violate the powers election entrusted to the others. Able to read and write A registered voter The Principle of Checks and Balances - The A resident of the Philippines for not less than Constitution establishes the three co-equal 1 year departments in as balanced positions as possible. To sustain balance or reinstate it if, in dismay, each JUDICIAL BRANCH department has certain powers to check one another. 1. The power to interpret Laws 2. The power to Judicial Reviews The Local Government Units in the Philippines - 3. Adjudicatory Powers often called local government units or LGU. It comprises three levels (1) provinces and Qualifications of the Members in the Supreme independent cities, (2) component cities and (3) Court municipalities, and barangays. An additional is an He must be a natural-born Filipino citizen autonomous region, the Autonomous Region of He must be at least 40 years of age Muslim Mindanao. He must have at least 15 years experience of The 1987 Constitution of the Philippines the lower court or engaged in the practice of Art. X, Section 2 states that the local law in the Philippines. governments shall enjoy local autonomy, He must be a person of proven competence, whereby the President of the Philippines integrity, probity, and independence. exercises general supervision. It provides a better responsive and accountable local TERMS OF OFFICE government structure; Congress enacted Executive Department the Local Government Code of the President - 1 term of 6 years without Philippines in 1991. reelection  There are two(2) branches of Local 1. Taxes. These are involuntary fees levied on government, namely: the executive and the individuals or corporations and imposed by legislative. Under the Supreme Court of the the government. Philippines are all courts in the Philippines, 2. Taxation. It is the imposition of compulsory and therefore there are no local-government taxes on individuals or entities by controlled judicial branches. governments. Taxes are enforced in almost every country in the world, mainly to raise The executive branch consists of the revenue for government expenditures while regional governor for the Autonomous serving other purposes. Region in Muslim Mindanao, governor for 3. Taxpayer. He or she may be an individual or provinces, mayor for cities and business entity obligated to pay taxes to be municipalities, and barangay captains. national or local government. 4. Resident Citizen. Citizen of the Philippines LGU’s ROLE IN DEVELOPMENT with a permanent home or place of residence in the Philippines and plans to return Sec. 16. General Welfare - LGU’s shall whenever he/she is absent for business or ensure and support preservation & pleasure. enrichment of culture, promote health and 5. Personal Income Tax. It is a tax on a safety, enhance the right of people to a person's income, payments, profits arising balanced ecology. from property, the practice of the profession, Sec. 17. Basic Services and Facilities - conduct of a trade or business. LGU’s shall discharge the functions and 6. Excise Tax. It is a tax paid when purchases responsibilities of national agencies and are made on a specific good, such as offices devolved to them. gasoline, and are often added to the product's price. DEVOLVED BASIC SERVICES 7. Estate Tax. It is a tax imposed on an heir's Agriculture inherited share of estate whenever the value Health of the estate surpasses an exclusion limit set Social Services by law. Environmental and Natural Resources 8. Property Tax. A tax paid by the owner of the Public Works property is based on the value of the owned Tourism property, including land. School building program 9. Donor’s Tax. It is a tax on a donation or gift and is imposed on the free transfer of Two-Fold Purpose of LGU: DUAL AGENCY property between two or more persons living Two-Fold Character of LGU: Governmental and at the time of the transfer. Private 10. Value-added Tax. Tax on the value of an article increased at each stage of production TYPES OF LGU’s UNDER THE 1987 or distribution. CONSTITUTION 11. Percentage Tax. It is a business tax Autonomous Region - 2 regions were pre imposed on persons or entities/transactions identified but only 1 is existing. who sell or lease goods, properties, or Provinces - composed of clusters of services in the course of trade or business. municipalities or municipalities and They are exempt from value-added tax (VAT) component cities under Section 109 (w) of the National Internal Cities - component and highly urbanized Revenue Code, as amended, whose gross Municipalities - composed of barangays annual sales and/or receipts do not exceed Barangay - basic political unit Php3,000,000.00. 12. Documentary Stamp Tax. Stamp tax levied, BRANCHES/COMPOSITION OF LGU’s collected and paid for on documents, Executive Branch - composed of Provincial instruments, loan agreements and papers, Governors, City and Municipal Mayors, and and upon acceptances, assignments, sales, Punong Baranggays. Called local chief and transfers of the obligation, right or executives. property incident to it, and in respect of the Legislative Branch - serves as lawmaking transaction so had or accomplished. and consultative body; Sangguniang Panlalawigan for Province; Sangguniang The Philippine Tax System Panlungsod for City; Sangguniang Bayan for The income of residents in the Philippines is Municipality; and Sangguniang Pambarangay taxed progressively up to 32%. Resident for Barangay. citizens are taxed on all their net income derived from sources within and without the Terminologies Philippines. For a non-resident, whether an individual or not of the Philippines, is taxable  only on income derived from sources within Moreover, the effective tax rates will be the Philippines. decreased by 99% taxpayers except for the The Philippine Taxation rich citizens with taxable income over PHP 8 The policy of taxation in the Philippines is million, who will face a tax rate of 35%. governed chiefly by the Constitution of the Estate tax and donor’s tax Philippines and the three Republic Acts. Estate tax – Decreased from the highest 20% Constitution: Article VI, Section rate to a single rate of 6% for the net estate 28 of the Constitution states that "the having a standard deduction of PHP5 million rule of taxation shall be uniform and to make the system simpler as well as an equitable" and that "Congress shall exemption for the first PHP10 million for the evolve a progressive system of family home. taxation." Donor's tax – Decreased from the highest National law: National Internal 15% rate to a single rate of 6% of net Revenue Code—enacted as donations abovePHP250,000 yearly. Republic Act No. 8424 or the Tax Value-added tax Reform Act of 1997 and Repeal of 54 out of 61 special laws with subsequent laws amending it; the law non-essential VAT exemptions, thereby was most recently amended by making the VAT system fairer. Republic Act No. 10963 or the Tax ✓Exceptions in tax code: condo and Reform for Acceleration and Inclusion association dues and cooperatives Act; and, (except electric coops). VAT on Local laws: major sources of medicines for diabetes, high revenue for the local government cholesterol, and hypertension are units (LGUs) are the taxes collected exempted from starting in 2019. under Republic Act No. 7160 or the ✓ The exceptions in special laws are Local Government Code of 1991, renewable energy, domestic coal, and those sourced from the proceeds credit surety, countryside barangay collected by a local ordinance. business enterprise, mini-hydro, PAGCOR and casino, and tourism. National taxes Purchases of senior citizens and people with The taxes compelled by the national government of disabilities remain to be exempted from the the Philippines include, but not limited to: VAT. Income Tax; For the average Filipino citizen, this will not Donor's Tax; affect the VAT exemption, deletion will only Estate Tax; affect groups enjoying exemptions. Value-Added Tax; Other taxes: excises Excise Tax; Mining excise tax – double the rates from 2% Percentage Tax; and to4% to be implemented. Documentary Stamp Tax. Cosmetic excise tax–a new tax at 5% of gross receipts will be implemented. The Tax Reform for Acceleration and Inclusion Tobacco excise tax – increase the rate from (TRAIN) Act, officially quoted as Republic Act No. PHP31.20 per pack in 2018 to 10963, is the initial package of the Comprehensive ✓ PHP32.50 between January to Tax Reform Program (CTRP) signed into law on June 2018, December 19, 2017, by President Rodrigo Duterte. ✓ PHP35 per pack from July 2018 to The TRAIN Act is the first of four packages of tax December 2019, reforms to the National Internal Revenue Code of ✓ PHP 37.50 per pack in 2020 and 1997, known as the Tax Code, as amended. This 2021, and package presented changes in personal income tax ✓ PHP 40.00 per pack in 2022 and (PIT), donor's tax, estate tax, value-added tax (VAT), 2023, followed by annual indexation documentary stamp tax (DST), an excise tax of of 4% tobacco products, petroleum products, mineral Other taxes: financial taxes products, automobiles, sweetened beverages, and Documentary stamp tax – There will be a cosmetic procedures. 100% increase except for loans (50%), and property, savings, and non-life insurance (no Key Provisions change). Foreign currency deposit unit (FCDU) – Personal income tax increased from 7.5% to15% final tax on The first PHP250,000 of annual taxable interest income. income will be exempt from income tax. Capital gains of non-traded stock–increased In addition, the first PHP 90,000 of the from 5-10% to 15% final tax on net gains. 13th-month pay and other bonuses will be Stock transaction tax – Increase from 0.5% exempt from income tax. to 0.6% of the transaction value. Package 1B in Q1 2018 in the Committees on Ways and Means, Local 1. Estate tax amnesty Government, and Finance 2. General amnesty 3. Motor vehicle user tax Package 4 or the proposed Passive Income and 4. Relaxation of bank secrecy and automatic Financial Intermediary Taxation Act (PIFITA) of exchange of information the Comprehensive Tax Reform Program (CTRP) Implications complements the recently- passed Tax Reform for Package 1B crucial to keep the 3% of GDP Acceleration and Inclusion Act (TRAIN) by making deficit target. passive income and intermediary financial taxes For 2019 to 2022, Packages 2-5 crucial for fairer, simpler, more efficient, and more meeting the 3% of GDP competitive in the regional level. It offers a window deficit target. of opportunity to attain a much-needed tax reform in If Congress does not pass sufficient tax the financial sector, an ingredient to fuel and direct reform, either the deficit will be infringed, or the movement of capital to where it is most needed expenditure needs to be cut. so that higher, sustainable, and more inclusive Next steps growth is achievable. ✓ Package 2 (January 16,2018) ✓ Corporate income tax reform and fiscal incentives ✓ Rice tariffication (Submittedin2017byNEDA) ✓ Package 2+ (January 31,2018) ✓ Remove VAT exemption of coal and casino ✓ Increase in the alcohol, tobacco, and mining tax ✓ Package 3 (July 2018) ✓ Property taxation ✓ Package 4 (July 2018) ✓ Passive income and financial taxes II. UPDATES: Package 2 of the Comprehensive Tax Reform Program (CTRP) pursues to lessen the corporate income tax (CIT) rate progressively from 30% to 20%, reorient fiscal incentives toward strategic growth in industries, and make incentives available to investors supplying the net positive contributions to society. LEGISLATIVE STATUS House of Representatives: Approved on third and final reading (September 10, 2019) Senate: Sponsorship of the bill by Ways and Means Committee Chairperson Senator Pia Cayetano (February 19, 2020) Package 3 of the Comprehensive Tax Reform Program (CTRP) intends to support the improvement of an equitable, just, and efficient real property valuation system. It will widen the tax base used for property-related taxes of the national and local levels of governments, thus, intensifying government revenues without expanding the existing tax rates or creating new tax impositions. LEGISLATIVE STATUS House of Representatives: Passed on third and final reading (November 25, 2019) Senate: Pending