the philippine national budget: part 2

7/21/2019 The Philippine National Budget: Part 2

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Taxation: The Lifeblood of the Nation

Taxation is the inherent power of the sovereign,

exercised through the legislature, to impose burdens

upon subjects and objects within its jurisdiction for

the purpose of raising revenues to carry out the

legitimate objects of government



Purposes of Taxation

! Revenue or fiscal: The primary purpose of

taxation on the part of the government is to provide

funds or property with which to promote the general

welfare and the protection of its citi"ens and to

enable it to finance its multifarious activities



Purposes of Taxation

# Non-revenue or regulatory: Taxation may also be employed for purposes of regulation or control

a$ %mposition of tariffs on imported goods toprotect local industries

b$ The adoption of progressively higher tax rates to

reduce ine&ualities in wealth and incomec$ The increase or decrease of taxes to preventinflation or ward off depression



'ules and regulations on tax collections are specified

in the Tax 'eform (ct of !))* %t identifies whose

duty it is to pay taxes in the country:

( citizen of the Philiines resi!ing therein is taxable

on all income derived from sources within and without the

Philippines+



( nonresi!ent citizen is taxable only on income derived

from sources within the Philippines+

(n in!ivi!ual citizen of the Philiines "ho is "or#ing

an! !eriving inco$e fro$ a%roa! as an overseas

contract "or#er is taxable only on income derived from

sources within the Philippines+



(n alien in!ivi!ual& "hether a resi!ent or not of the

Philiines, is taxable only on income derived from sources

within the Philippines+

( !o$estic cororation is taxable on all income derived

from sources within and without the Philippines+ and

( foreign cororation, whether engaged or not in trade or

business in the Philippines, is taxable only on income derived

from sources within the Philippines



ebt and Borrowing: -orld Ban. / %01

2uperficially the Ban. and %01 exhibit manycommon characteristics

Both are in a sense owned and directed by thegovernments of member nations

Both institutions concern themselves with economicissues and concentrate their efforts on broadening

and strengthening the economies of their membernations



The fundamental difference is this: the Ban. isprimarily a development institution+ the %01 is acooperative institution that see.s to maintain anorderly system of payments and receipts betweennations

3ach has a ! different purpose, # distinct structure,

4 receives its funding from different sources, 5assists different categories of members, and 6 strivesto achieve distinct goals through methods peculiar toitself



The current issues on public debts and economic

crisis maybe be traced bac. between the years !)*)7

!)89, these were the times when the government

revenues declined by !6 percent of P

while expenditures increased by 46 percent

(s a result, by !)89, the government faced theprimary deficit of !9 percent and the fiscal deficit

increased for over 6 percent of P



Thereafter, Philippine governments have reacted to

revenue shortfalls and by the beginning in !))8, the

tax7to7P ratio began to decline The government

deficit continued to rise until #;;#



(nd in #;;47#;;5, the government did try to cut its

primary spending by !# percent of P 1urther, in

#;;), the fiscal deficit was 4) percent ofthe P

2ince then, because of budget deficits, the country

continued to obtain debts and implemented

expenditure cuts



%mproving 'evenue performance is one majorchallenge for the Philippine government

Last (ugust #;!5 report, an estimated P#6; billion islost yearly because of tax evasions

This would simply mean that the government must

necessarily exhaust all the efforts to raise taxcompliance, and it must also curb corruptionpractices in the revenue agencies



%n #;!4, the overnment achieved a budget deficite&uivalent to !5 percent of P

(nd last 0arch #;!5, the epartment of 1inancesaid that Budget deficit is expected to hit the amount

of P45#Billion which is more or less #4 percent ofthe P



The rising debt service payments have affected and

lessen the country<s public expenditures for the priority

areas7 such as basic education, health and transport

Between !))* and #;!;, the shares of the national

budget going to the epartment of 3ducation, the

epartment of =ealth >?=$ and to capital outlaysdeclined from !8 to!5 percent, from 4 to # percent and

from #; to !; percent respectively



ebt and Borrowing: -orld Ban. / %01

“Because of our fiscal consolidation efforts, we will need

to borrow only P674.8 billion to finance the projected

P308.7billion deficit, to a!orti"e P347.7 billion of our

!aturin# outstandin# debt, while !aintainin# sufficient

a$ailable cash. %his will enable us to further reduce our

debt stoc& to 4'.8 percent of ()P by end*0'6.+

-Presi!ent 'enigno S( A)uino III



%mplementation of National Budget

the philippine national budget: part 2

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