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Budget Cycle

Dealing with Public Fiscal Administration


and Performance Mechanism
Reported by:
Ashmyra Abdullah
Jasmine Ezradin Trihana S. Linso

Fiscal Administration
-

formulation,
implementation
and
evaluation of policies and decisions on
taxation and revenue collection; resources
allocation; budgeting and auditing

Fiscal Policies
- programs of action involving the system of
government expenditures and revenue
administration

Fiscal Management
> commences from income generation for the
public sector, particularly in the form of tax
revenues
Revenues
> important component of the economy to exist,
and without collection there would be nothing to
administer or manage.

Fiscal Transparency and Its Code


Fiscal Transparency
> relates to being open to public scrutiny
> recognized as a requisite of a well
functioning public sector

Fiscal Transparency and Its Code


To quote Baldrich:
assuming the integrity of fiscal procedures, a
transparent fiscal environment limits corruption
and diversion and, therefore, facilitates
development and increase in living status

Reports on Observance of Standards


and Code (ROSC)
> provides an assessment of the
corporate governance framework in the
Philippines its laws and regulations.
> main idea was to strengthen institutions
with the aim of promoting good
governance and transparency

Code of Good Practices on Fiscal


Transparency (CGPFT)
> initiated by World Bank (WB) and International
Monetary Fund (IMF) in the late 1990s that
provided four principles of the Code:
a.) clarity of roles and responsibilities of the
government;
b.) public availability of information
c.) open budget preparation, execution and
reporting
d.) the assurances of integrity

To quote the IMF:


fiscal transparency should make those
responsible for the design and implementation of
fiscal policy more accountable. The stronger,
more credible fiscal policies that follow would
attract the support of a well-informed public,
result in more favorable access to capital
markets, and reduce the incidence and severity
of crisis

Fiscal Accountability
In the words of Francisco S. Tantuico Jr.,
former Chairman of COA:
Public accountability is the foundation of
integrity. It cuts to the soul of government. It
unmasks the government of the day of whatever
faade it wears.

Fiscal Accountability
According to the Constitution of the Philippines:
Public Office is a public trust. Public officers and
employees must at all times be accountable to the
people, serve them with utmost responsibility, integrity,
loyalty and efficiency, act with patriotism and justice and
lead modest lives.

Fiscal Accountability
Ledivina V. Cario, former Dean of the National College
of Public Administration and Governance of the
University of the Philippines, defines accountability as:
the evolution of the actions of appointed career
officials in terms of whether their actions are within or
outside the bounds of their authority. It may be promoted
through the imposition of external controls and through
the inculcation of self-regulating values.

Different levels of Accountability, according to


Cario:
i) traditional accountability
> focuses on the regularity of fiscal
transaction and faithful compliance as well as
the adherence to legal requirements and
administrative policies;
ii) managerial accountability
> concerned with efficiency and economy in
the use of funds, property, manpower, and other
resources;

Different levels of Accountability, according to


Cario:
iii) program accountability
> pays attention to the results of government
operations;
iv) process accountability
> emphasizes procedures and methods of
operation

Following factors that can help achieve public


financial accountability:
1.) Strong legal basis, organizational structure,
rules, regulations and procedures;
2.) Regular monitoring and reporting to the public
through the media and civil society
organizations;
3.) Appropriate information technology system and
timely processing of reliable information;
4.) Strong leadership committed to ensuring public
financial accountability a leadership committed
to promoting good governance

Budgetary Management in the Philippines

Development Budget
Coordinating Committee

Department
of Finance
(DOF)

Department of
Budget and
Management
(DBM)

National
Economic and
Development
Authority
(NEDA)

The Office
of the
President

Bangko
Sentral ng
Pilipinas
(BSP)

Development Budget
Coordinating Committee

Department
of Finance
(DOF)

Department of
Budget and
Management
(DBM)

National
Economic and
Development
Authority
(NEDA)

Office of
the
President

Department of Finance has primary responsibility for


managing the financial resources of the government, its
subdivisions and associated agencies. It is responsible for
formulating fiscal policy, generating and managing
government
resources,
supervising
the
revenue
operations of all LGUs, managing all public sector debt
and contingent liabilities and privatizing government
corporation and assets.

Bangko
Sentral ng
Pilipinas
(BSP)

Development Budget
Coordinating Committee

Department
of Finance
(DOF)

Department of
Budget and
Management
(DBM)

National
Economic and
Development
Authority
(NEDA)

The Office
of the
President

Bangko
Sentral ng
Pilipinas
(BSP)

Department of Budget and Management is tasked with


formulating and efficiently implementing the national budget
-including budget programming and monitoring agency
accountability.

Development Budget
Coordinating Committee

Department
of Finance
(DOF)

Department of
Budget and
Management
(DBM)

National
Economic and
Development
Authority
(NEDA)

The Office
of the
President

Bangko
Sentral ng
Pilipinas
(BSP)

National Economic and Development Authority coordinates


social and economic development planning and monitors
major projects.

Framework for Budgetary Activities


A Development Budget Coordination
Committee (DBM, DOF, NEDA, OP, & BSP)
determines the overall economic targets,
expenditure levels and budget framework
Government funds are allocated to individual
departments on the basis of budget estimates
that each head of department, government
agency and public corporation must submit to
the DBM.

Framework for Budgetary Activities


Review and approval of the proposed budget by
the President and the Cabinet
The estimates are submitted to Congress as the
presidents budget, in the form of the National
Expenditure Program (NEP) and the Budget of
Expenditures and Sources of Financing (BESF).

Department of Budget and Management (DBM)

- The lead agency for budget assessment,


distribution, and operation in the
Philippines

Department of Budget and Management (DBM)


Tactical roles and responsibilities towards the achievement
of the DBMs institutional relevance:
1. Fiscal Discipline
- to ensure that the Government as a whole lives within
its means
2. Effective Resource Allocation
- to ensure that Government expenditures, after
meeting the basic needs of turning the nations wheels,
will be channeled towards strategic requirements for a
competitive and job-creating economy.

Department of Budget and Management (DBM)


Tactical roles and responsibilities towards the achievement
of the DBMs institutional relevance:
3. Efficient Government Operations
- to ensure that quality government goods and services
are delivered on time and at the least cost

Bureau of Internal Revenue


- as an attached agency of the Department of Finance,
BIR, collects more than one-half of the total revenues of
the government
- BIR shall be under the supervision and control of the
Department of Finance and its powers and duties shall
comprehend the assessment and collection of all
national internal revenue taxes, fees, and charges, and
the enforcement of all forfeitures, penalties and fines
connected therewith, including the execution of
judgments in all cases decided in its favor by the Court
of Appeals and the ordinary courts

Framework for Taxation


National Internal Revenue Code
- explicit legal basis for all taxes
- tasks the BIR with the collection of taxes

Accounting Monitoring: COA


Commission on Audit (COA)
- an independent constitutional commission
established by the Constitution of the Philippines
- has the primary function to examine, audit and
settle all accounts an expenditures of the funds
and properties of the Philippine government

Responsibilities of COA
1. Examines, audits, and settles all accounts pertaining
to the revenue and receipts of, and expenditure or uses
of funds and property owned or held in trust by, or
pertaining to, the government.
2. Promulgates accounting and auditing rules and
regulations including those for the prevention and
disallowance of irregular, unnecessary, excessive,
extravagant or unconscionable expenditures, or uses of
government funds and properties.

Responsibilities of COA
3. Submits annual reports to the President and the
Congress on the financial condition and operation of the
government.
4. Recommends measures to improve the efficiency and
effectiveness of government operations.
5. Keeps the general accounts of government and
preserve the vouchers and supporting papers pertaining
thereto.

Responsibilities of COA
6. Decides any case brought before it within 50 days.
7. Performs such other duties and functions as may be
provided by law.

New Tax Measures

1. Sin Tax
- improving the structure and increasing
the rate of excise tax on alcohol and
tobacco products
- also known as excise taxes
- called sin tax because they are taxes
on goods considered as vices

New Tax Measures

2. Passage of Value Added Tax Law


- involved expanded coverage of Vat (EVAT) that resulted in lifting of exemptions
from VAT for some professionals, natural
gas, coal, and petroleum products

New Tax Measures

3. The Lateral Attrition Law


- amended in January 2005 to boos tax
administration in both the BIR and
Bureau of Customs (BOC) by providing
performance incentives and improving
performance evaluation systems for both
bureaus

Improvements in Tax Collection


The DOF Report the following program as contained in its
Achievement and Medium Term Scenario Paper in 2005:
1. Run After Tax Evaders (RATE)
- The program aims to file tax cases against high profile
personalities
2. Run After the Smugglers (RATS)
- The objective is to file tax cases against high profile smugglers
3. Revenue Integrity Protection Service (RIPS)
- The program involves the conduct of lifestyle checks against
officers and employees of the BIR and BOC.

Debt and Expenditure Management


The Government had drafted a fiscal
responsibility bill that proposes a prudent
debt and expenditure management
strategy.
The Government has approved that
proceeds from the VAT reform will be used
primarily for debt reduction