PA 131 - Public Fiscal Administration

Distribution Function of Fiscal Policy?

Adjustment of the distribution of income and wealth to assure conformance with what society considers a 'fair' or 'just' state of distribution. The distribution of income and wealth determined by the market forces and laws of inheritance involve a substantial degree of inequality. Tax transfer policies of the government play an important role in reducing the inequalities in income and wealth in the economy.

International Dependence of Growth?

International division of labour - rich in high value activity, poor in low value, can be traced back to colonial and imperial dominance Dominance of political decision making in the hands of a few wealthy and powerful groups who aim to maintain the status quo Such interest groups also exercise power over international institutions and initiatives such as the World Trade Organisation, International Monetary Fund, Kyoto talks, etc. Advice given to poorer nations has been poor - e.g. lending to less developed countries, investment advice, etc. Inability to solve the debt crisis and protectionism continues to prevent development of poorest countries The International Dependence model can perhaps be exemplified by the lack of progress on reducing emissions to restrict climate change and freeing up international trade.

Goods Exempted from Import Duties?

Small Value Importations (goods with FOB or FCA 10k below) Conditionally-free importations - Relief Consignment - commodities used in aid of victims of calamities. Such goods are not only exempt from duties, they are also prioritized

Importation?

act of bringing in of goods from a foreign territory into Philippine territory, whether for consumption, warehousing, or admission.

Republic Act No. 7553

the New Central Bank Act, all internal and local borrowing by the national government and its political subdivisions, including cities and municipalities, shall be subject only to the approval of the Bangko Sentral ng Pilipinas.

Budget?

•An estimate of income and expenditure for a particular set or period of time. •A concrete and precise picture of the total operation of an enterprise in monetary terms

Article 10, Sec. 5 - Local Government

(5) Each local government unit shall have the power to create its own sources of revenues and to levy taxes, fees, and charges subject to such guidelines and limitations as the Congress may provide, consistent with the basic policy of local autonomy. Such taxes, fees, and charges shall accrue exclusively to the local governments. (6) Local government units shall have a just share, as determined by law, in the national taxes which shall be automatically released to them. (7) Local governments shall be entitled to an equitable share in the proceeds of the utilization and development of the national wealth within their respective areas, in the manner provided by law, including sharing the same with the inhabitants by way of direct benefits.

Market Failure?

A situation when there's a faulty allocation of resources in a market. It is triggered when there is an acute mismatch between supply and demand, prices do not match reality or when individual interests are not aligned with collective interests.

Lewis 2 Sector Model of Structural Change?

Agriculture - low value added Industrial sector - higher productivity and wealth generation Incentives to encourage workers to migrate from rural economy to urban Rural workers have very low if not zero marginal productivity Wage premiums in urban industry 30% above rural wages would encourage migration from rural to urban whilst still allowing profits to be made Re-investment of profits would lead to a self perpetuating development

How are Goods Subjected to Custom Duties?

All goods imported are subject to import duties unless specifically exempted under the CMTA or special laws. All goods exported are now exempt from customs duties except for logs which remain to be subject to export duties.

Bill of Rights?

Art. 3 of the PH Constitution is established to establish the relationship of an individual to the state and defines the rights of the individuals by limiting the lawful powers of the State.

Rostow - Stages of Growth?

Characterization of Societies in terms of Growth: 1. Traditional - subsistence economy; output not traded; existence of barter; high levels of agriculture and labour intensive agri 2. Pre-conditions - development of mining; increase capital in agri; necessity of external funding; growth and investment (fund is used to generate small surpluses for trading) 3. Take-off - increasing industrialisation linked to primary industries; further growth in investment; some regional growth; number employed in agri declines" 4. Drive to maturity - growth becomes self-sustaining as wealth generation enables further investment and value adding products and development; industry more diversified; increase in use of technology; 5. High mass consump - high output levels; mass consumption of consumer durables; high proportion of employment (service industry dominating)

Dualistic Economy?

Employment opportunities or activities exists in urban areas whereas traditional production method is used in rural areas. Employment opportunities are less. Hence, these countries have dualistic economy which results in various problems with formulating economic policies

Problems in Market-Based Growth?

Existence of market failure - externalities, monopoly power, public goods Problems of lack of infrastructure - education and health, public transport, legal structure Problems of equity in allocation - wealth and income distribution

Stabilization Function of Fiscal Policy?

Full employment and price level stability do not come about automatically in a market economy. Without it the economy tends to be subject to substantial fluctuations, and it may suffer from sustained periods of unemployment or inflation. Unemployment and inflation may exist at the same time. Such a situation is known as stagflation.

Tax exemptions?

Government agencies performing governmental functions are exempt from taxation Non-delegation. The power to tax being legislative in nature may not be delegated. (subject to exceptions)

Vicious Circle of Poverty?

Low Investment-Low Production-Low Capital-Low Investment-Low Production-Low Income

Bill of Rights, Sec 22

No ex post facto law or bill of attainder shall be enacted.

Philippine Free Trade Agreement

Some products may qualify for duty-free entry into Philippine free trade agreement (FTA) with partner countries. Targeting FTA countries is a competitive market entry strategy. That's because buyers pay fewer tariffs for goods made FTA member countries compared with similar goods from countries without FTAs.

Person responsible to pay customs duties?

The Declarant (Sec. 107). •The declarant may be the consignee or the person who has the right to dispose of the goods. (Sec. 106) Specifically, the following are considered to be declarants: •The importer, being the holder of the bill of lading; or •The exporter, being the owner of the goods to be shipped out; or A person duly empowered to act as agent or attorney-in-fact for each holder But, •Person duly empowered to act as agent or attorney-in-fact •The customs broker, though may be a declarant themself, is not liable to pay the customs duties (Sec. 107). •The exporter is only liable if the goods they export are logs. •Aside from payment of taxes, the declarant is also responsible for the accuracy of the goods declaration, even though exempted from duties. (Sec. 107) •In case the consignee or the person who has the right to dispose of the goods is a juridical person, it may authorize a responsible officer of the company to sign the goods declaration as declarant on its behalf.

Role of NEDA in Budget Preparation?

The NEDA provides the over-all macro-economic assumptions with which budgetary levels are to be determined. They involve the projected Gross National Product (GNP) real growth rates, inflation rates, 91-day treasury bill rates, the London Interbank Offered Rates (LIBOR) rates, foreign exchange rates, population growth, and other economic parameters.

Budget Accountability

The accountability phase is the final phase of the budget process. This is when the agencies report their actual physical and financial performance. (performance indicators) •The Commission on Audit (COA) figures prominently in the assessment of agency performance. The COA is the government body tasked with looking at the legality, propriety and accuracy of government financial transactions. The COA has auditors assigned to each government agency and it has regional offices to review these transactions. Those that are considered excessive, inappropriate or illegal are not passed in audit. COA can recommend means for setting them right, if such is still possible. •Trial balances of agencies, which are submitted to DBM and COA on a quarterly and annual basis, report how agencies use up their allotments and cash allocations

Budget Legislation (Authorization)

The president submits the NEP, BESF, and PBM The BESF is the document which reflects the annual budget and the estimates and sources of financing. The document is presented by the Executive branch to the Legislative branch •The proposed budget is first reviewed by the Committee on Appropriations of the House of Representatives. The Committee summons the agencies to justify their budgets, with the DBM assisting and providing technical inputs. The Appropriations Committee then presents to the House body the proposed budget and passes it at the Third Reading. •This then goes to the Senate Finance Committee for another round of hearings and deliberations. The Committee presents the proposed amendments to the House Budget Bill to the Senate for approval Consequently, the amended budget proposal is presented to the House body as the General Appropriations Bill. •The Senate Finance Committee, through its different subcommittees also starts to conduct its own review and scrutiny of the proposed budget and proposes amendments to the House Budget Bill to the Senate body for approval. Then a Bicameral Conference Committee, composed of members of both Houses, is convened to resolve differences. If there are items which he/she disagrees with, then the President can exercise line-item veto power. The President then signs it into law as the General Appropriations Act.

Allocation Function of Fiscal Policy?

The provision for social goods or the process by which total resource use is divided between private and social goods and by which the mix of social goods is chosen. This provision may be termed as the allocation function of budget policy. Social goods, as distinct from private goods, cannot be provided for through the market system

Demographic characteristics of developing countries?

There is high growth rate of population in developing countries. Children under 15 are majority. Because these groups are economically inactive, they have to depend on the family.

Criticisms on Rostow's Stages of Growth?

Too simple, necessity of financial infrastructure to channel any savings, investment does not necessarily result to growth, need for other infrastructure - HR (edu), roads, rail, comm networks, Rostow argued economies would learn from one another and reduce the time taken to develop - has this happened?

Exportation?

act, documentation, and process of bringing goods out of Philippine territory.

Programmed appropriations?

are appropriations with definite/identified funding as of the time the budget is prepared

Unprogrammed appropriations

are those which provide standby authority to incur additional agency obligations for priority programs or projects when revenue collection exceed targets, and when additional grants or foreign funds are generated.

Management by Objectives (MBO)

•A large number bureaucrats observed that the PPB could not be applied everywhere because it required trained personnel, and large number of specialists. MBO is a goal-setting and performance management framework, while budgeting involves planning and allocating financial resources. Combining the two can enhance organizational alignment and accountability.

Types of Duties?

•As to the basis for computation •Ad valorem - tax is computed based on the price or value of the commodity •Specific - tax is computed on the basis of weight, volume, capacity or any other physical unit of measurement •As to purpose •Ordinary or Regular - collected for the purpose of raising revenues •Special - collected for the purpose of protecting local industries

Types of Special Duties?

•Dumping Duties - imposed upon foreign goods with prices substantially lower than local goods to the detriment of the latter. •Countervailing Duties - imposed upon foreign goods enjoying subsidy thus allowing them to sell at lower prices to the detriment of similar local products. •Marking Duties - imposed upon those goods not properly marked as to the place of origin. [The purpose of incorrect marking is usually to deceive buyers.] •Discriminatory/Retaliatory Duties - imposed upon goods coming from countries that discriminate against Philippine products. •Safeguard Duties - imposed upon goods imported in the Philippines in increased quantities to the detriment of local products.

Characteristics of a Sound Tax System?

•Fairness •Clarity •Certainty •Convenience •Efficiency

Purpose of Budgeting?

•Mechanism for translating fiscal objectives into projected spending pattern •Enhances fiscal planning and decision-making •Clearly recognizes controllable and uncontrollable cost areas Offers a useful format for communicating fiscal objectives •Allow feedback of utilization of budget •Helps identify problem areas and facilitates effective solution •Provide means for measuring and recording financial success with objectives of organization

Effects of Taxation?

•Personal Income Tax which is presumed to fall entirely on the legal taxpayers influences decisions to work, save, and invest. These decisions affect other people. •Corporate Income Tax may simply result to lower corporate profits and dividends. It may reduce the income of all owners of property and businesses. The company may move toward raising the prices of their products •Lower income tax rates to enhance the competitiveness of the Philippines in the region •Removal of areas which provide avenues for tax avoidance and abuse •Exemption of OFWs from payment of tax for income earned outside the Philippines •Simplification of the tax system which encourages payments from tax payers including those from the underground economy

Role of DBCC in Budget Preparation?

•The DBCC determines the overall economic targets, expenditure levels, the revenue projection, deficit levels and the financing plan. It submits them to the President and the Cabinet for approval.

Role of DOF in Budget Preparation?

•The Department of Finance (DOF), the Bureau of the Treasury, the Bureau of Internal Revenue and the Bureau of Customs help the DBCC in determining the sources of financing. They project the revenues that will be generated for the budget year as well as the borrowings that may have to be tapped

Budgeting - Article 7, Sec. 22

"The President shall submit to the Congress within thirty (30) days from the opening of every regular session, as the basis of the General Appropriations Bill, a budget of receipts and expenditures and sources of financing, including receipts from existing and proposed revenue measures.

Article 15, Sec. 5 - EDUCATION, SCIENCE AND TECHNOLOGY, ARTS, CULTURE, AND SPORTS

(5) The State shall assign the highest budgetary priority to education and ensure that teaching will attract and retain its rightful share of the best available talents through adequate remuneration and other means of job satisfaction and fulfillment.

Budgeting?

•the preparation of income and expenditure. •the allocation of public funds to attain the economic and social goals of the country. It also entails the management of government expenditures to create the most impact from the production and delivery of goods and services.

Stages of MBO?

1. Setting Objectives: - organizational objectives are set at various levels, including strategic, tactical, and operational. These objectives should align with the organization's mission, vision, and long-term goals. 2. Cascading Objectives - Each level of management sets objectives that contribute to achieving higher-level goals. This alignment ensures that all employees are working towards common objectives. 3. Developing Departmental Goals: - In the budgeting process, departments or units set financial and operational goals for the upcoming budget period. 4. Budget Allocation - once departmental goals are established, budget allocation follows. Departments receive financial resources based on the goals and activities required to meet their objectives. 5. Monitoring Progress: In MBO, ongoing performance monitoring is essential. Managers and employees track progress toward achieving objectives. In budgeting, financial performance is continuously monitored to ensure that expenditures align with the allocated budget. 6. Adjusting the Budget: Based on the performance data from both MBO and budgeting, adjustments can be made as needed. Departments might request additional resources or identify areas where cost savings can be achieved. 7. Performance Evaluation: In MBO, regular performance evaluations are conducted to assess the achievement of objectives. In budgeting, financial performance is evaluated to ensure that the budget is adhered to. 8. Feedback and Learning: Both MBO and budgeting processes provide opportunities for feedback and learning. Lessons from one period can inform goal setting and budgeting in the next.

By the Legislative Department, Sec 28 states:

1. The rule of taxation shall be uniform and equitable. The Congress shall evolve a progressive system of taxation. 2. The Congress may, by law, authorize the President to fix within specified limits, and subject to such limitations and restrictions as it may impose, tariff rates, import and export quotas, tonnage and wharfage dues, and other duties or imposts within the framework of the national development program of the Government. 3. Charitable institutions, churches and parsonages or convents appurtenant thereto, mosques, non-profit cemeteries, and all lands, buildings, and improvements, actually, directly, and exclusively used for religious, charitable, or educational purposes shall be exempt from taxation. 4. No law granting any tax exemption shall be passed without the concurrence of a majority of all the Members of the Congress

Article 9, Section 2 of the 1987 Constitution

Prime basis of accounting and auditing of public finance The Audit Code of the Philippines

What are the inherent limitations?

Purpose. Taxes may be levied only for public purpose; Territoriality. The State may tax persons and properties under its jurisdiction; International Comity. the property of a foreign State may not be taxed by another.

Budget Execution?

•The approved budget becomes effective on the first day of the budget year concerned, or when it is signed by the President, whichever comes later. •It is at the budget execution stage that the expenditure program is implemented. Allotments are issued, chargeable against the regular agency budgets. It is also at this stage where agencies may submit requests for availment from SPFs. Agencies are often required to submit additional reports and documents to support their requests •Special Purpose Funds (SPFs) are budgetary allocations in the General Appropriations Act (GAA) allocated for specific purposes. •Cash releases are made to agencies to cover obligations that are current or carried over from the previous year. •Not all allotment releases require the issuance of Notice of Cash Allocation releases or NCAs. Examples of these are debt service, customs duties and taxes, the conversion of liability to equity, or the subsidy to government corporations. The Cash Release Program is also based on actual obligations of an agency, as reported in the quarterly trial balance submitted to DBM. Hence, it will not issue NCAs for unobligated balances of allotments.

Taxation?

•The system of compulsory contributions levied by a government or other qualified body on people, corporations and property in order to fund public expenditures.

Criticisms on Structural Change of Growth?

Labour re-allocation not always productive Wealth not re-invested locally Wealth goes abroad Imperfections in the labour market Importance of complementary policies by all countries involved

Article 15, Sec. 3 and 4 - EDUCATION, SCIENCE AND TECHNOLOGY, ARTS, CULTURE, AND SPORTS

3. All revenues and assets of non-stock, non-profit educational institutions used actually, directly, and exclusively for educational purposes shall be exempt from taxes and duties. Upon the dissolution or cessation of the corporate existence of such institutions, their assets shall be disposed of in the manner provided by law. Proprietary educational institutions, including those cooperatively owned, may likewise be entitled to such exemptions subject to the limitations provided by law including restrictions on dividends and provisions for reinvestment. 4. Subject to conditions prescribed by law, all grants, endowments, donations, or contributions used actually, directly, and exclusively for educational purposes shall be exempt from tax.

Tax Revenues?

Compulsory charges or levies imposed by government on goods, services, transactions, individuals, entities and others, arising from the sovereign power of state. Examples of these are the income tax, value-added tax, and import duties.

Characteristics of Developing Countries?

Developing countries = poor countries = underdeveloped countries = third world countries <S400 = low income countires <S750 = less developed GDP and Per Capita Income are at low level Poverty is visible Life expectancy <60 years High dependence on agriculture = main occupation (>70% active labor); there is low output per head; increasing population becomes a buden Underutilized Natural Resources - most are rich in natural resources; exploration and exploitation are limited; sometimes foreign countries control them; raw products are exported at low prices Lack of Industries and Enterprises - industrial growth is very slow; contribution to GDP is less than 10% and employment from active sector is only 2-4% Lack of Capital and Technology - save less which results in low capital formation; technology is old and unproductive Lack of Basic infrastructures - lack in good road system, highways, telephone, services, big dams, and canals, banks, and financial services

Socio-cultural characteristics of developing countries?

Developing countries harbor may discordant social patterns in their economic life.

Market-Based Growth

Development is determined by the extent to which the market is able to allocate resources The price signal acts to allocate scarce resources Governments limit interference in the working of the economy Government role is to encourage enterprise and to reduce regulation and inefficiencies in free markets and establish ownership of property rights

Privatization Program?

Launched by the government in 1987 pursuant to Proclamation No. 50 to sell non-performing assets (NPAs) of government financial institutions and government-owned and controlled corporations transferred to the national government. This program enables the NG to divest itself of assets that would be more productive in the hands of the private sector.

Other charges and fees collected in connection with the shipment of goods

Harbor fee - the amount which the owner, agent, operator or master of a vessel has to pay for each entrance into or departure from a port of entry in the Philippines. Reason: A vessel ordinarily enters a harbour and lays anchor or moors in a port to load, or unload or both and in doing so, the vessel derives benefits from port facilities maintained by the government. •Wharfage Charge - the amount assessed against the cargo of a vessel engaged in the foreign trade. The owner, consignee, or agent of either, of the merchandise is the person liable for such charge. • Purpose: Wharfage charges are specifically allotted for the special Port Works Fund. (Lim, p. 869, citing Phil. Iron Mines v. Commissioner of Customs, 30 SCRA 60, and Victorias Milling v. Auditor General, 116 Phil. 1139) •Berthing Charge - the amount assessed against a vessel for mooring or berthing at a pier, wharf, bulkhead wharf, river or channel marginal wharf at any port in the Philippines; or for mooring or making fast to a vessel so berthed; or for coming or mooring within any slip, channel, basin, river or canal under the jurisdiction of any port of the Philippines. The owner, agent, operator or master of the vessel is liable for this charge. Storage Charge - the amount assessed on merchandise for storage in customs premises, cargo sheds and warehouses of the government. The owner, consignee, or agent of either, of the merchandise is liable for this charge •Arrastre Charge - the amount which the owner, consignee, or agent of either, of merchandise or baggage has to pay for the handling, receiving and custody of the imported or exported merchandise or the baggage of the passengers. •Tonnage Due - the amount paid by the owner, agent, operator or master of a vessel engaged in foreign trade, whether coming to or going out of the P

Kinds of Taxes?

Income tax - yearly profits from assets; tax on person's income, profits Donor's tax - tax imposed on donations inter-vivos Estate tax - Tax on the right of the deceased person to transmit property at death Value-added Tax (VAT) - tax imposed and collected on every sale, barter, exchange or transaction deemed sale of taxable goods, properties, lease of goods, services or properties in the course of trade as they pass along the production and distribution chain Capital Gains Tax - Tax imposed on the gains presumed to have been realized by the seller for the sale •Excise Tax •Tax applicable to specified goods manufactured in the Philippines for domestic sale or consumption •Specific tax: imposed on certain goods based on weight or volume capacity or any other physical unit of measurement (Specific tax = volume x tax rate) -Alcohol products, petroleum products •Ad valorem tax: imposed on certain goods based on selling price or other specified value of the goods (Ad valorem tax = selling price x tax rate) - Mineral products, automobiles Documentary Tax - Tax on documents, instruments, loan agreements and papers, agreements evidencing the acceptance, assignments, sale or transfer of an obligation, rights or property incident thereto Withholding tax - •Commonly referred to as pay as you go or pay as you earn. A method of collecting the income tax at source upon receipt of the income. Expanded withholding tax - a system of collecting taxes whereby the taxes withheld on certain income payments are intended to equal or at least approximate the tax due of the payer on said income Final withholding tax - a system of collecting taxes whereby the amount of income tax withheld by the withholding agent is constituted as a full payment of the income tax due from the payer on the said income. The payer is not requi

Smuggling?

It refers to the fraudulent act of importing goods to the Philippines. •It is an act punishable under the Customers Modernization and Tariffs Act. It includes: Importing goods by means of fraudulent, falsified, or erroneous declaration of the goods, for the purpose of reducing or avoiding payment of taxes and duties (technical smuggling). Importing goods without complete importation documents, or without being cleared by customs or the government, for the purpose of reducing or avoiding payment of taxes and duties (outright smuggling). The act of assisting in receiving, concealing, buying, selling, disposing, or transporting such goods with full knowledge that the same has been fraudulently imported The fraudulent exportation of goods.

Types of Policy?

Regulatory policy - designed to limit the actions of persons or groups so as to protect Distributive policy - uses tax revenues to provide benefits to individuals or groups by means of grants or subsidies Redistributive policy - take taxes from certain groups & give them to another group Income stabilization - support to unemployed or retired Social welfare - providing direct payments to indigents Health care programs - Medicare Constituent policy - intended to benefit the public generally or to serve the government (foreign and defense policies, policies related to structure like government reorganization)

Bill of Rights, Sec 10

No law impairing the obligation of contracts shall be passed.

Bill of Rights, Sec 5

No law shall be made respecting an establishment of religion, or prohibiting the free exercise thereof. The free exercise and enjoyment of religious profession and worship, without discrimination or preference, shall forever be allowed. No religious test shall be required for the exercise of civil or political rights.

Bill of Rights, Sec 1

No person shall be deprived of life, liberty, or property without due process of law, nor shall any person be denied the equal protection of the laws.

Bill of Rights, Sec 20

No person shall be imprisoned for debt or non-payment of a poll tax.

Non-tax Revenues?

Non-tax Revenues are collected from sources other than compulsory tax levies, including those collected for direct services rendered by government agencies to the public. They can also arise from the government's regulatory and investment activities. Examples cover fees and charges, Treasury income, privatization proceeds and foreign grants •Government Corporations •Financial Institutions •Exchange Services •Regulatory Services •Penalties •Privatization •Aid •Aid from another level of government (intragovernmental aid): •Aid from abroad (foreign aid) •Tribute or indemnities paid by a weaker state to a stronger one, often as a condition of peace after suffering military defeat. The war reparations paid by the defeated Central Powers after the First World War and Axis Powers after the Second World War offer well-known examples. •Loans, or other borrowing, from monetary funds and/or other governments •Revenue from state-owned enterprises (Government Corporations) •Revenue (including interest or profit) from investment funds (collective investment schemes), sovereign wealth funds, Investment or endowments •Rents, concessions, and royalties collected by the state - Issuances of permit - User fees collected in exchange for the use of many public services and facilities. Tolls charged for the use of toll roads are an example •Donations and voluntary contributions to the state

Criticisms on International Independence?

Offers causes but no solutions Talks to free up trade have been going on for many years; progress is slow. We know that protectionism is disadvantageous to developing countries but how do we go about putting in place solutions to help solve the problem?

Development or Transformation Function of Fiscal Policy?

One recurring problem is maintaining high employment or of curtailing inflation within a given level of capacity output. The effects of fiscal policy upon the rate of growth of potential output must also be allowed for. Fiscal policy may affect the rate of saving and the willingness to invest and may thereby influence the rate of capital formation.

Structural Change of Growth?

Process of structural change determines the rate of development Less developed nations - tend to be dominated by primary industries - low value added, difficult to generate wealth and thus sources of investment Developed nations - diverse economies, high value added, high levels of investment Structural change can be encouraged by incentives

Article 15, Sec 11

Right to enjoy the benefits of science The Congress may provide for incentives, including tax deductions, to encourage private participation in programs of basic and applied scientific research. Scholarships, grants-in-aid, or other forms of incentives shall be provided to deserving science students, researchers, scientists, inventors, technologists, and specially gifted citizens.

Budgeting - Article 6, Sec 24 and 26

Section 24, Article VI, which states that all appropriations, revenue or tariff bills increase of the public debt, bills of local application and private bills shall originate in the House of Representatives, but the Senate may propose or concur with amendments Section 25 (1), Article VI, states that the Congress may not increase the appropriations recommended by the President for the operation of the government as specified in the budget. The form, content, and manner of preparation of the budget shall be prescribed by law. Section 25 (2), Article VI states that no provision or enactment shall be embraced in the General Appropriations Bill unless it relates specifically to some particular appropriation therein. Any such provision or enactment shall be limited in its operation to the appropriations to which it relates. Section 25 (4), Article VI: "A special appropriations bill shall specify the purpose for which it is intended, and shall be supported by funds actually available as certified by the National Treasurer, or to be raised by a corresponding revenue proposal therein." Section 25 (5), Article VI: "No law shall be passed authorizing any transfer of appropriations, however, the President , the President of the Senate, the Speaker of the House of Representatives, the Chief Justice of the Supreme Court, and the Heads of Constitutional Commissions may, by law, be authorized to augment any item in the general appropriations law for their respective e offices from savings in other items of their respective appropriations." Section 25 (7), Article VI: "If, by the end of the fiscal year, the [Philippine] Congress shall have failed to pass the General Appropriations Bill for the ensuing fiscal year, the General Appropriations Law for the preceding fiscal year shall be deemed re-enacted and shall remain in

Fairness Character of a Sound Tax System?

Taxation fairness - burden of taxation should be distributed fairly among individuals and businesses within a society. Progressivity - This means that individuals with higher incomes pay a higher percentage of their income in taxes than those with lower incomes (reduces inequality) Ability to pay - Those who can afford to pay more taxes should contribute a larger share of their income or wealth to support public services and government functions. Equity - Taxation should be equitable, meaning that taxpayers in similar financial situations should be subject to similar tax liabilities. Equity is achieved by applying consistent tax rules and rates to individuals and entities with similar income levels, assets, or financial circumstances Transparency - People should be aware of how taxes are calculated, what deductions and exemptions are available, and how tax revenues are used by the government. Transparency reduces confusion and enhances public trust in the tax system. Simplicity - simplicity in its structure and administration.; do not exploit loopholes or engage in tax avoidance. Horizontal Equity - that taxpayers with similar income or financial circumstances should pay similar taxes, regardless of other factors like age, race, or gender Vertical Equity - that taxpayers with different income levels should contribute different amounts of tax. Efficiency - minimizes the economic costs associated with tax collection and compliance; resources are used effectively Redistribution - tax revenues are used to fund social programs and services that benefit society as a whole or provide targeted assistance to disadvantaged individuals or communities. Compliance and Enforcement - involves effective enforcement mechanisms to ensure that all taxpayers, including individuals and businesses, meet their tax obligations. This

Planning Programming-Budgeting-System

a system of resource allocation designed to improve government efficiency and effectiveness by establishing long range planning goals, analyzing the costs and benefits of alternative programs that would meet these goals and articulating programs as budgetary and legislative proposals and long term projections. Planning: The first phase of PPBS involves setting clear objectives and goals for government programs and activities. Programming: In this phase, agencies assess the various program options available and develop a range of proposals. These proposals detail the resources required, both in terms of funding and personnel, to execute the programs effectively. Budgeting: After programs are selected and prioritized, the budget is developed to allocate resources to each program according to the proposed program budgets. Evaluation: Continuous program evaluation is a critical aspect of PPBS. Agencies are expected to monitor program performance and assess whether the programs are achieving their objectives Decision Packages: Agencies submit "decision packages" that include a comprehensive description of each program's objectives, benefits, and resource requirements Linking Resources to Results: PPBS emphasizes the importance of tying resource allocation to the anticipated results and benefits of each program Priority Setting: PPBS helps government agencies and organizations set clear priorities by evaluating the potential impact of various programs •Accountability: By focusing on program objectives and outcomes, PPBS increases transparency and accountability in government spending, as it allows for clearer tracking of how resources are used to achieve specific goals.

Tariff or duty?

a tax levied by governments on the value including freight and insurance of imported products •Tariff refers to the schedule of rates applied to goods as basis for the computation of customs duties, which, on the other hand, are the taxes levied on certain goods. National sales and local taxes, and in some instances customs fees, are often charged in addition to the tariff.

Gen Purpose of Tariffs and Duties?

•The tariff, along with the other assessments, is collected at the time of customs clearance in the port. Tariffs and taxes increase the cost of the product to the buyer and may affect the competitiveness in the market. The knowledge of the final cost to the buyer can help a foreign business price their product for that market. In addition, the buyer may ask the foreign business to quote an estimate of these costs before making the purchase. •Revenue-raising •Protection of local industries •Economic stimulation

Purpose of Taxation?

•To raise revenues for public needs so that persons can live in a civilized society •The government increase taxes in order to stabilize prices and stimulate greater production. •An instrument of fiscal policy influences the direction and structure of money supply, investments, credits, production, interest rate, inflation, prices and in general, of the national economy

Zero-based budgeting?

involves allocation of resources to agencies on the basis of those agencies periodically re-evaluating the need for all of the programs for which the agency is responsible. •Analysis of Programs and Activities: Under ZBB, all programs, projects, and activities within an organization are evaluated. Each activity is considered a separate "decision unit," and their objectives, costs, and benefits are thoroughly examined. •Cost-Benefit Analysis: For each decision unit, a cost-benefit analysis is conducted to determine its necessity and effectiveness. This analysis may involve evaluating the expected outcomes, costs, and alternatives for each program. Ranking and Prioritization: Decision units are then ranked or prioritized based on their cost-effectiveness and alignment with organizational objectives. Budget Proposals: After ranking and prioritization, budget proposals are developed for each decision unit, starting from zero. These proposals include the resources required to carry out the program's activities effectively| •Decision-Making: Decision-makers review and approve the budget proposals for each decision unit. This process often involves a rigorous evaluation of the merits and alignment of each program with organizational goals. Resource Allocation: Once the budget proposals are approved, resources are allocated to the decision units based on their merit, effectiveness, and priority. •Ongoing Monitoring: ZBB doesn't end with budget approval. Organizations continuously monitor and evaluate the performance of programs and activities to ensure that resources are being used efficiently and effectively. Adjustments are made as needed based on real-time data and performance assessments.

Goods declaration?

refers to a statement made in the manner prescribed by the Bureau and other appropriate agencies, by which the persons concerned indicate the procedure to be observed in the application for the entry or admission of imported goods and the particulars of which the customs administration shall require.

Performance Budgeting?

system of resource allocation that organizes the budget document by operations and programs and links performance levels of those operations and programs with specific budget amounts. Features: •Outcome-Oriented: Performance budgeting centers on desired outcomes and results, often expressed in terms of specific objectives, indicators, or key performance metrics. It seeks to align budget allocations with the accomplishment of these outcomes. •Program-Based: Budgets are typically organized around specific programs or activities. Each program is associated with a clear set of objectives, and funding is allocated based on the resources required to achieve these objectives. •Performance Measurement: The budgeting process includes the establishment of performance measures, targets, and benchmarks that allow for the assessment of program effectiveness. These measures help in tracking progress and evaluating the success of programs. •Resource Allocation: The allocation of resources in performance budgeting is directly tied to program performance. Programs that are performing well may receive increased funding, while those underperforming may face reduced allocations or additional scrutiny. •Transparency: Performance budgeting aims to make the budget process more transparent and understandable for stakeholders. It allows for better communication of how public funds are being used to achieve specific outcomes. •Evaluation and Accountability: Regular program evaluation and monitoring are integral to performance budgeting. Agencies and organizations are held accountable for achieving the performance targets set in their budgets. •Flexibility: Performance budgeting allows for more flexibility in resource allocation. It enables governments and organizations to make data-driven decisions on where to allocate reso

Line-item budgeting?

•A line-item budget is allocation of resources according to the cost of each object of expenditure. The purpose of the line-item budget is to estimate the cost of a scheme or project and the expected benefit. Features History: This means that the budget for each line item is usually determined by the previous year's budget or adjusted for inflation. Minimal Detail: Each line item typically represents a broad category of expenses, such as salaries, office supplies, utilities, or travel expenses. This lack of detail can make it challenging to analyze and control specific costs within these categories. •Incremental Changes: Line item budgets tend to be adjusted incrementally, with changes being made from the previous year's budget. This can result in a gradual increase in expenses without a thorough evaluation of each line item's necessity. •Limited Flexibility: Line item budgets may lack flexibility, as they do not encourage a detailed examination of the value or necessity of individual expenditures. As a result, it may be challenging to reallocate resources to more critical areas. •Simplicity: Line item budgets are straightforward and easy to create, making them suitable for organizations or government agencies with limited resources for budgeting. •Accountability: Line item budgets can provide a level of accountability, as expenditures are associated with specific categories, making it clear where funds are allocated. Critics argue that it may not promote efficiency, prioritize important programs, or respond effectively to changing circumstances. Other budgeting methods, such as program-based budgeting or zero-based budgeting, have been developed to address some of these shortcomings and offer more strategic and performance-focused approaches to budgeting.

Budgeting Principles?

•Budget should provide sound financial management by focusing on the requirements of the organization •Budget should focus on objectives and policies of the organization. It must flow from objectives and give realistic expression to the way of realizing such objectives •Budget should ensure the most effective use of scarce financial and non financial resources •Budget requires the program activities planned in advance •Budgetary process requires consistent delegation for which fixed duties and responsibilities are required to be allocated to managers at different levels for framing and executing budget •Budgeting should include coordinating efforts of various departments establishing frame of reference for managerial decisions, and providing a criterion for evaluating managerial performance. •Setting budget targets requires an adequate checks and balance against the adoption of too high or too low an estimate. Utmost care is must in fixing target. •Budget period must be appropriate to the nature of business or service and the type of budget •Budget is prepared under the direction and supervision of the administrator or finance offices •Budget is to be prepared and interpreted consistently throughout the organization in the communication of planning process •Budget necessitates a review of performance of the previous year and an evaluation of its adequacy both in quantity and quality •While developing a budget, provision should be made for its flexibility

Expense Class?

•Current Operating Expenditures (COE) are amounts budgeted for the purchase of goods and services for normal government operations within the budget year. These cover Personal Services (PS) and Maintenance and Other Operating Expenses (MOOE). PS refer to the provisions for the payment of salaries, wages and other compensation/benefits. They cover permanent, temporary, contractual and casual employees of the government. MOOE refers to recurring expenses to cover day-to-day requirements of agencies to carry out their regular operations. •Debt Amortization refers to the sum of principal repayments for loans payable by regular installments. It also refers to the annual contribution to the debt sinking fund for debts payable only upon maturity. •Disbursements are cash withdrawals from the Bureau of the Treasury for the payment of budgetary transactions. Each month, the DBM and the Bureau of Treasury meet to draw up a disbursement plan known as the cash release program. This is based on reports of cash balances of agencies, as well as the projected inflow of revenues.

ZBB Benefits?

•Enhanced Efficiency: ZBB encourages organizations to critically evaluate and prioritize their activities, which can lead to the more efficient allocation of resources. •Greater Accountability: Decision units are justified based on their merits and alignment with objectives, making it easier to hold managers and departments accountable for their spending. •Cost Reduction: ZBB can help identify and eliminate redundant or non-essential programs, resulting in cost savings. •Strategic Focus: ZBB forces organizations to align their budgets with strategic goals and objectives, ensuring that resources are directed to the most critical areas. •Flexibility: ZBB allows organizations to adapt to changing circumstances and allocate resources where they are needed most.

Budget Preparation?

•The budget preparation phase starts with the Development Budget Coordination Committee (DBCC). It is headed by the DBM Secretary and its members are the Secretary of Finance, the NEDA Director-General, and the Bangko Sentral Governor, with the Office of the President for general oversight. •Once these are approved, the DBM issues the Budget Call. This requires agencies to prepare their budgets in accordance with the said guidelines, macro-economic assumptions, and ceilings. The DBM spells out guidelines, procedures, and timetables. •Agencies undertake their own internal consultations. They rank programs, projects and activities using the capital budgeting approach. Then they submit their budget estimates, taking into account their own priorities and those of the national government under the Medium-term Public Investment Program (MTPIP) •The DBM then conducts technical budget hearings where agencies defend and justify their proposals. Organizational and budgetary issues are clarified. •The proposed expenditure programs are confirmed by the agency heads. •The DBM consolidates the budget proposals and then submits them to the Cabinet where the budget is discussed with the President. •Once the budget is approved by the President and the Cabinet, the President submits it to Congress. This must be done no more than thirty days after the opening of its regular session, as required under the Constitution.

History of Taxation?

•The first record of taxation was found in ancient Egypt, where the Pharaoh collected a tax equivalent to 20 percent of all grain harvests. At the time, Egypt was without coined money, so grain represented a tangible store of value that could easily be collected, traded, and redistributed throughout society. • The Rosetta Stone, the key to unlocking the meaning of hieroglyphics, was mostly a tax document that explained new tax laws decreed in 196 BCE. •Julius Caesar was the first to implement a sales tax: a 1 percent flat rate that was applied across the entire Empire. Under Caesar Augustus, the sales tax was 4 percent. •Ancient Roman Emperor Augustus changed the tax system in the late 1st century BCE. The collection had originally been done through "tax farmers" who collected taxes from their respective regions based on the assessment of the region as a whole and turned them over to the government. This system was difficult to continue, and Augustus switched to a direct taxation system that resembled an income tax. This began as a direct tax on an individual's wealth, but when it was clear this too was difficult to execute, the income tax replaced that collection. In ancient times, property taxes were levied in Egypt, Persia, and China. Originally, these taxes were based on the production value of the land, or how much the plot was expected to yield in goods, and therefore were typically paid by farmers. Property taxes continued in Medieval Europe under William the Conqueror in England. Famously, Lady Godiva rode a horse through the streets naked in protest of the property tax rate her husband was forced to pay. Inheritance taxes originated in the Roman Empire and funded the pensions of veterans, levied at a rate of 5 percent on inherited property •Tariffs have been dated to the 3000s BCE on tra