BY: JUDEA ANNE C GACUSAN

I. Meaning of Fiscal Policy V. Fiscal Policy in the Philippines

II. Objectives a. Revenue and Funding

III. Instrument of Fiscal Policy b. Tax Revenue

a. Budget c. Income Tax

b. Taxation d. EVAT

c. Public Expenditure e. Tariffs and Duties

d. Public Debt f. Non-Tax Revenue

IV.Types of Fiscal Policy g. Financing and Debt

a. Expansionary Fiscal Policy h. Domestic Sources of Financing

b. Contractionary Fiscal Policy VI. History of Philippine Fiscal Policy

 The word fisc means “state treasury” and fiscal policy
refers to policy concerning the use of “state treasury” or
the government finances to achieve the macroeconomic
goals.
 Fiscal policy involves the decisions that a government
makes regarding collection of revenue, through taxation
and about spending that revenue.
 It is sister strategy to monetary policy through which a
central bank influences a nation’s money supply.
 Fiscal policy is how Congress and other elected
officials influence the economy using spending and
taxation. It is used in conjunction with the monetary
policy implemented by central banks. It influences the
economy using the money supply and interest rates.

 This policy is also known as budgetary policy

1 Development by effective mobilization of resources.
2 Reduction of inequalities of income and wealth.
3 Price stability and control of inflation.
4 Employment generation.
5 Reducing the deficit in the balance of payment.
6 Increasing national income
7 Development of infrastructure.
 Instruments of Fiscal Policy

Public Public
Budget Taxation
expenditure Debt
 is a detailed plan of operations for some
specific future period.

 It is presented by the finance officer of a

country.

 Budget is also known as Annual

Financial Statement of the year.
 is a powerful instrument of fiscal policy in
the hands of public authorities.

 It includes income, capital gains from

investments, property and sales.
DIRECT TAX INDIRECT TAX
 Individual Income Tax  Central excise
 Corporate Tax  VAT 12.5%
 Wealth 2%  Service Tax 14%
 Custom Duty
 is spending made by the government of a
country on collective needs and wants
such as pension, provision, infrastructure
and etc.
1 Size of the Country and Population
2 Defense expenditure
3 Welfare State
4 Economic Development
5 Price Rise
Developmental Revenue Plan Expenditure

Non-Developmental Capital Non Plan Expenditure

 is defined as any money loaned by a government
agency.
 the public debt is how much a country owes to
lenders outside of itself. These can include
individuals, businesses and even other
governments. The term “public debt” is often used
interchangeably with the term sovereign debt.
INTERNAL BORROWINGS
 Borrowings from the public
means of treasury bills and
government bonds
 borrowings from central bank
EXTERNAL BORROWINGS
 International organization like
World Bank
 Market borrowings
 EXPANSIONARY CONTRACTIONARY
FISCAL POLICY FISCAL POLICY
- is when government - is when the government
expands the money supply either cuts spending or
in the economy. It raises taxes. It reduces the
stimulates economic amount of money available
growth. for businesses and
consumers to spend.
1 To boost growth to a healthy economic level.

2 To reduce unemployment.

3 To increase consumer demand.

To avoid a recession or if a recession has

4 already occurred, then it seeks to end the
recession and prevents depression.
Expansionary fiscal policy
works fast if done correctly.
Expansionary fiscal policy
restores consumers and
business confidence.
Tax cuts decrease
government revenue. This
creates a budget deficit
that’s added to the debt.
The Philippine Government generates revenues through:

personal and income tax collection

a small portion of non-tax revenue is also collected

through fees and licenses, privatization proceeds and
income from other government operations and state-
owned enterprises.
Tax revenue is the income that is gained by
governments through taxation

Tax collections comprise the biggest

percentage of revenue collected.

Tax effort as a percentage of GDP has

averaged at roughly 13% for the years 2001-
2010.
 National Government (NG) revenue collection and
expenditures exceeded their respective programs for the
first half of the year resulting in a P193.0-billion deficit
which is 27% lower than programmed alongside 25% year-
on-year growth. Likewise, fiscal results for June 2018
indicates a lower than programmed deficit of P54.3 billion,
down 40% from the June 2017 level, on the back of strong
revenue growth exceeding the acceleration in government
spending.
 Year-to-date revenue collection amounted to
P1,410.5 billion, beating the target by 8% or P105.7
billion in registering a 20% increase from the
previous year. Meanwhile, revenues reached
P224.2 billion for June, reflecting 25% year-on-year
growth.
 Bureau of Internal Revenue (BIR) collections from the previous months
ensured a better-than-programmed year-to-date collection of P964.5
billion which is 3% better than programmed and 14% higher year-on-
year.

 Bureau of Customs (BOC) has collected P279.4 billion from January to

June 2018, indicating 33% growth in the year-to-date total which tops
the target by 3%.

 Bureau of the Treasury (BTr) income of P66.1 billion for the first
semester was more than double the P31.5 billion program and 25%
higher year-on-year.
- is a tax on a person’s income, wages,
profit arising from property, practice of
profession, conduct of trade or business
(tax code of 1997).
 Annual Taxable Income Income Tax Rate
Less than ₱10,000 5%

Over ₱10,000 but not over ₱30,000 ₱500 + 10% of the excess over ₱10,000

Over ₱30,000 but not over ₱70,000 ₱2,500 + 15% of the excess over ₱30,000

Over ₱70,000 but not over ₱140,000 ₱8,500 + 20% of the excess over ₱70,000

Over ₱140,000 but not over ₱250,000 ₱22,500 + 25% of the excess over ₱140,000

Over ₱250,000 but not over ₱500,000 ₱50,000 + 30% of the excess over ₱250,000

Over ₱500,000 ₱125,000 + 32% of the excess over ₱500,000

- Tax Reform for Acceleration and
Inclusion Act (TRAIN) aims to provide relief
99% of the tax paying workers in the
country by reducing their monthly income
taxes.
 R.A 10963

Income Tax Rate

Annual Taxable Income (2018-2022)

Lower Limit Over Lower Limit

Less than ₱250,000 - 0%

Over ₱250,000 but not over ₱400,000 - 20%

Over ₱400,000 but not over ₱800,000 30,000 25%

Over ₱800,000 but not over ₱2,000,000 130,000 30%

Over ₱2,000,000 but not over ₱8,000,000 490,000 32%

Over ₱8,000,000 and above 2,410,000 35%

 Income Tax Rate Income Tax Rate
(2018-2022) (2023 onwards)
Annual Taxable Income
Lower Over Lower Lower Over Lower
Limit Limit Limit Limit

Less than ₱250,000 - 0% - 0%

Over ₱250,000 but not over ₱400,000 - 20% - 15%

Over ₱400,000 but not over ₱800,000 30,000 25% 22,500 20%

Over ₱800,000 but not over ₱2,000,000 130,000 30% 102,500 25%

Over ₱2,000,000 but not over ₱8,000,000 490,000 32% 402,500 30%

Over ₱8,000,000 and above 2,410,000 35% 2,202,500 35%

• It is a form of sales tax that is imposed on the
sale of goods and services and on the import of
goods into the Philippines.

• It is a consumption tax (those who consume

more are taxed more) and an indirect tax, which
can be passed on to the buyer.

• The current E-VAT rate is 12% of transactions.

• The Bureau of Customs (BOC) imposes tariffs
and duties on all items imported into the
Philippines.

• According to Executive Order 206, returning

residents, Overseas Filipino Workers (OFW’s)
and former Filipino citizens are exempted from
paying duties and tariffs.
Non-tax revenue makes up a small percentage
of total government revenue (roughly less than
20%), and consists of collections of fees and
licenses, privatization proceeds and income from
other state enterprises.
• The Bureau of Treasury (BTr) manages the finances of the
government, by attempting to maximize revenue collected
and minimize spending.
• Under Executive Order No.449, the Bureau of Treasury
collects revenue by issuing, servicing and redeeming
government securities, and by controlling the Securities
Stabilization Fund (which increases the liquidity and
stabilizes the value of government securities) through the
purchase and sale of government bills and bonds.
It is the incidence or process of transferring
ownership of a business enterprise, agency or
public service form the public sector to private
sector or to private non-profit organizations.
• The Philippine Amusement and Gaming Corporation
(PAGCOR) is a government-owned corporation established
in 1977 to stop illegal casino operations.
• PAGCOR is mandated to regulate and license gambling
(particularly in casinos), generate revenues for the
Philippine government through its own casinos and promote
tourism in the country.
EXTERNAL SOURCES OF FINANCING ARE:
1 Program and Project Loans Credit Facility Loans

2 Zero-coupon Treasury Bills

3 Global Bonds
4 Foreign Currencies
DOMESTIC SOURCES OF FINANCING ARE:

1 Treasury Bonds 4 Bond Exchanges

2 Facility Loans 5 Promissory Notes

3 Treasury Bills 6 Term Deposits

 Fiscal policy during the Marcos
administration was primarily focused on
indirect tax collection and on government
spending on economic services and
infrastructure development.
 The first Aquino administration inherited a
large fiscal deficit from the previous administration,
but managed to reduce fiscal imbalance and
improve tax collection through the introduction of
the 1986 Tax Reform Program and the value added
tax.
The Ramos administration experienced budget
surpluses due to substantial gains from the
massive sale of government assets and strong
foreign investment in years and
administrations.
The Estrada administration faced a large fiscal
deficit due to the decrease in tax effort and the
repayment of the Ramos administration’s debt
to contractors and suppliers.
During the Arroyo administration, the Expanded
Value Added Tax Law was enacted, national debt-
to-GDP ratio peaked, and underspending on
public infrastructure and other capital
expenditures was observed.
REFERENCES:
http://en.wikipedia.org/wiki/fiscal_policy_of_the_philippines#p-search
www.bsp.gov.ph
www.dof.gov.ph
Philpad.com
Economicsdiscussion.net