Prepared By :

Kristea Carpio

Lesson1: Private Vs. Public

Economy

Private EconomyBenefit of Business

& IndustryDetermines How

much spends according to needs use labor and capital effectively.

Public Economy ServiceBudget is allocated

based on previous.

Concerned with a collective sytem of economy

Reason to study:

To be aware in numerous functions of the government.

The Theory Of Public Finance

Governance The physical exercise of management power

and policyFiscal AdministrationHow public budgets operatePublic incomeHow wealth is produced, distributed and

preservedTaxationOther sources of government IncomeEx. Individual Income Tax

Topics:

Taxes Biggest source of government funds.

Lesson2: Sources and uses of Public Funds

Two Collecting Tax AgenciesAgency of Department of Finance

The Bureau of Internal RevenueInternal revenue taxesfees and chargesenforcement of all forfeiturespenalties and finespresently headed by Deputy Commissioner

Lilian Hefti.

The Bureau of Custom In charge of imports exports and foreign trade.presently headed by Commissioner Napoleon

Morales

Income taxes of individualsBusiness property taxesResidence taxesImport taxesInheritance taxesGift taxesOther specific taxes

Types Of Taxes

Collection of fines and feesLicenses and registration chargesCommercial revenueProfits earned by government- operated and

controlled corporations.

Non-Tax Revenues

Political reluctance to raise taxesGovernment- sponsored capital improvementsTo stimulate the economy

The Government Tends to borrow for Three reason:

Internal SourcesEx. Central Bank

External SourcesEx. Foreign Governments

Types of Sources:

Functional Classification of Public Expenditures

By: Paulo

Is the duty of the Government to provide its children with the rudiments of at least a Primary Education.

Education

state is to provide for its National Defense, thus, protection against the foreign aggression or even domestic terrorism.

National Defense, Peace and Order

public welfare cover a wide range. The term is used to include expenditures for society indigents, the infirm, and the aged.

Health and Welfare

Another priority of the government. Priority projects include infrastructure, agro-industrial production, both for export and domestic consumption.

Economic Development

is the act of laying a tax. It is the process or means by which the sovereign through its law-making body raises income to defray the necessary expenses of the government.

Taxation

1) The primary purpose is to raise income for government needs and this is identified as the revenue purpose.

2) The secondary purposes of taxation are:

Purposes of taxation

A) Compensatory Purposes• To reduce excessive inequalities of wealth • To maintain high level of employment• To control inflation

B) Sumptuary or Regulatory Purposes• To implement the police power of the state

which in charge in the promotion of general welfare

Theory and Basis of Taxation

• The power of taxation proceeds upon the theory that the existence of government is a necessity and that it cannot continue without the means of pay its expenses.

• The state collects taxes from the subjects of taxation in order that it may be able to perform the functions.

• The lifeblood Theory means that taxes are the lifeblood of the government and their prompt and certain availability are an imperious( expecting obedience) need.

TAXATION & TAXESBY; MICHELLE

Taxation Taxation is the process of tax collection.

Taxes are most important source of government

revenues.

2 GENERAL PRINCIPLES OF TAXATION

1. Benefit Received Principle

holds that an individual's tax burden should be proportional to the amount of "benefit" that the individual receives from the resource .

2. Ability to pay Principles

underlies the system of progressive income taxation  the richer pay a higher percentage of income tax 

 2 DIMENSIONS OF ABILITY TO PAY PRINCIPLES:

1.Horizontal Equity implies that we give the same treatment to people in an identical

situation.

2.Vertical Equity Implies that people with higher

incomes should pay more tax. 

The Cost of Service Theory Satisfy the idea of equity or justice in

taxation

Fiscal Adequacy The source of revenue should be sufficient to the demands of public

expenditures.

The tax should be adequate for future revenues.

PROPORTIONATE PRINCIPLE

Taxes are levied in proportion to the income of individuals

The Principles of Certainty, Convenience,

and Economy

By: Carmela

Certainty

A good tax ought to be certain, not arbitrary

Convenience

Tax paid should be the least annoying

Economy

no tax should be imposed which is not capable of efficient and economical administration

Tax Incidence

it does not depend on where the revenue is collected, but on the price elasticity of demand and the price elasticity supply

Canons of taxation

Fiscal Adequacy Equality or theoretical justice Administrative feasibility

Characteristics or nature of the state’s power to tax

It is inherent in sovereignty It is legislative in character It is subject to constitutional and

inherent limitations

Processes included in taxation

Levying or imposition of tax Collection of the tax

Essential characteristic of tax

Enforced contribution Levied pursuant to legislative authority Proportionate in character Payable in money

Essential characteristic of tax

Levied upon persons and property with in the jurisdiction of the state

Levied and collected for the purpose of raising revenue to be used for public purpose

Essential characteristic of tax

Required to be paid at regular intervals

Classification of Taxes

A.

Direct – is demanded from the person who shoulders the burden of tax

Classification of Taxes

Indirect- tax which can be passed on by the seller to the buyer

Classification of Taxes

B. According to the rate or gradation

Proportional Regressive Progressive

Classification of Taxes

C. According to economic stages

Acquisition Exchange consumption

Classification of Taxes

D. According to mode of levy

Personal Impersonal Mixed

Classification of Taxes

E. As to authority imposing the tax or scope

National Municipal

Classification of Taxes

F. As to determination of amount

Specific Ad valorem

Classification of Taxes

G. As to purpose

General, fiscal, or revenue Specific or Regulatory

By: Abigail

Taxes and Government Borrowing

TAX

from the Latin taxo "I estimate“

~ is to impose a financial charge or other toll upon a taxpayer (an individual or legal entity)

Continuation…..

~ by a state or the functional equivalent of a state such that failure to pay is punishable by law.

Types of Taxes

~ Direct~ Indirect

~ "pecuniary burden laid upon individuals or property owners to support the government a payment exacted by legislative authority.“

~ is the system by which the government takes money from people and spends it on things such as education, health and defense.

-Black Law’s Dictionary

Government Borrowing

~ is the debt owed by a central government.

~ the total amount of money that a country's central government has borrowed to fund its spending on public services and benefits.

Money borrowed by the government through issuance of securities, bonds and bills. The government borrows money to make up the difference between revenues and expenditures. The money comes from lenders within the country and from foreign lenders.

Stabilization

~ involves the effort by the government to achieve “full employment with low inflation” or an “acceptable unemployment and inflation”.

The graph below shows historical exchange rates between the Philippine Peso (PHP) and the US Dollar (USD)between 8/6/2012 and 9/4/2012

Fiscal Policy

~ measures are frequently used in tandem with monetary policy to achieve certain goals."

Tariff

~ is a tax or duty levied on the import of goods.

~ is a tax that a government collects on good coming into a country.

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