The Philippine National

Budget:
RE V E N U E A N D S P E N D I N G

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

1. 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 citizens and to
enable it to finance its multifarious activities.

Purposes of Taxation

2.
Non-revenue or regulatory: Taxation may also
be employed for purposes of regulation or control.
a)
Imposition of tariffs on imported goods to
protect local industries.
b)
The adoption of progressively higher tax rates to
reduce inequalities in wealth and income.
c)
The increase or decrease of taxes to prevent
inflation or ward off depression.

Rules and regulations on tax collections are specified

in the Tax Reform Act of 1997. It identifies whose

duty it is to pay taxes in the country:

A citizen of the Philippines residing therein is taxable

on all income derived from sources within and without the
Philippines;

A nonresident citizen is taxable only on income derived

from sources within the Philippines;

An individual citizen of the Philippines who is working

and deriving income from abroad as an overseas
contract worker is taxable only on income derived from
sources within the Philippines;

An alien individual, whether a resident or not of the

Philippines, is taxable only on income derived from sources
within the Philippines;

A domestic corporation is taxable on all income derived

from sources within and without the Philippines; and

A foreign corporation, whether engaged or not in trade or

business in the Philippines, is taxable only on income derived
from sources within the Philippines

Debt and Borrowing: World Bank & IMF

Superficially the Bank and IMF exhibit many

common characteristics.
Both are in a sense owned and directed by the
governments of member nations.
Both institutions concern themselves with economic
issues and concentrate their efforts on broadening
and strengthening the economies of their member
nations.

The fundamental difference is this: the Bank is

primarily a development institution; the IMF is a

cooperative institution that seeks to maintain an
orderly system of payments and receipts between
nations.
Each has a 1. different purpose, 2. distinct structure,

3. receives its funding from different sources, 4.

assists different categories of members, and 5. strives
to achieve distinct goals through methods peculiar to
itself.

The current issues on public debts and economic

crisis maybe be traced back between the years 19791986, these were the times when the government
revenues declined by 1.5 percent of GDP
while expenditures increased by 3.5 percent.
As a result, by 1986, the government faced the

primary deficit of 1.6 percent and the fiscal deficit

increased for over 5 percent of GDP.

Thereafter, Philippine governments have reacted to

revenue shortfalls and by the beginning in 1998, the

tax-to-GDP ratio began to decline. The government
deficit continued to rise until 2002.

And in 2003-2004, the government did try to cut its

primary spending by 1.2 percent of GDP. Further, in

2009, the fiscal deficit was 3.9 percent ofthe GDP.
Since then, because of budget deficits, the country
continued to obtain debts and implemented
expenditure cuts.

Improving Revenue performance is one major

challenge for the Philippine government.

Last August 2014 report, an estimated P250 billion is

lost yearly because of tax evasions.
This would simply mean that the government must

necessarily exhaust all the efforts to raise tax

compliance, and it must also curb corruption
practices in the revenue agencies

 In 2013, the Government achieved a budget deficit

equivalent to 1.4 percent of GDP.

And last March 2014, the Department of Finance

said that Budget deficit is expected to hit the amount

of P34.2Billion which is more or less 2.3 percent of
the GDP.

The rising debt service payments have affected and

lessen the countrys public expenditures for the priority

areas- such as basic education, health and transport.
Between 1997 and 2010, the shares of the national
budget going to the Department of Education, the
Department of Health (DOH) and to capital outlays
declined from 18 to14 percent, from 3 to 2 percent and
from 20 to 10 percent respectively.

Debt and Borrowing: World Bank & IMF

Because of our fiscal consolidation efforts, we will need

to borrow only P674.8 billion to finance the projected

P308.7-billion deficit, to amortize P347.7 billion of our
maturing outstanding debt, while maintaining sufficient
available cash. This will enable us to further reduce our
debt stock to 41.8 percent of GDP by end-2016.
-President Benigno S. Aquino III

Implementation of National Budget