Upload
carendleon
View
218
Download
0
Embed Size (px)
Citation preview
8/3/2019 The Government, Fiscal Policy and Taxation
1/35
The Government, Fiscal
Policy & Taxation
8/3/2019 The Government, Fiscal Policy and Taxation
2/35
Investment
An amount of money
invested in somethingfor the purpose ofmaking a profit
8/3/2019 The Government, Fiscal Policy and Taxation
3/35
Expenditure
- An amount ofmoney spent as a
whole or an aparticular thing
8/3/2019 The Government, Fiscal Policy and Taxation
4/35
Fiscal Policy
Takes off to influence income andconsumption and lead the economy
toward growth and development wheremonetary policy left off.
As a tool utilizes government spending
and taxation as means to control theeconomy.
Cannot be easily manipulated; goes hand
in hand with monetary policy.
8/3/2019 The Government, Fiscal Policy and Taxation
5/35
Government
Very important sector of
the economyMakes up for the private
schools deficiencyBig spender and big
borrower
8/3/2019 The Government, Fiscal Policy and Taxation
6/35
Sources and Uses of PublicFunds
8/3/2019 The Government, Fiscal Policy and Taxation
7/35
Taxes- Biggest source ofgovernment funds.
8/3/2019 The Government, Fiscal Policy and Taxation
8/35
2 tax collecting agencies:
Bureau of InternalRevenue
Bureau ofCustoms
8/3/2019 The Government, Fiscal Policy and Taxation
9/35
a. Taxes collected
includes: Income taxes of individuals &
businesses
Property taxes
Import taxes
Inheritance taxes Gift taxes
And other specific taxes
8/3/2019 The Government, Fiscal Policy and Taxation
10/35
b. Non-tax Revenues
Governments also earns income from
Ex. Collection of fines and fees
Licenses and registration charges
Profits earned by government-operated and controlled corporations(GOCC)
8/3/2019 The Government, Fiscal Policy and Taxation
11/35
Borrowing
- Government resorts to
when revenues areinsufficient to finance
growing budget.
8/3/2019 The Government, Fiscal Policy and Taxation
12/35
Public Debt- Consist of all claims against our
government which may have resultedfrom loans or advances extendedto the government or as payment forgoods and services rendered to it, forwhich the existence of indebtednesshas been acknowledged by thegovernment.
8/3/2019 The Government, Fiscal Policy and Taxation
13/35
A government tends to
borrow for 3 reasons:1. Due to political reluctance to raise taxes
2. A sense that some government
sponsored capital improvements shouldbe paid for gradually over the life of theinvestment by those who will be
taxpayers while the improvements areproviding benefits.
3. A deliberate use of the budget to
stimulate the economy
8/3/2019 The Government, Fiscal Policy and Taxation
14/35
Government
Expenditures: occupies the top position among the
various government expenses.
Consists of spending connected withthe maintenance of the different
government subdivisions andinstrumentalities
Ex. Salaries of government officials
and employees.
8/3/2019 The Government, Fiscal Policy and Taxation
15/35
3 Types ofBudget:
1. Deficit Budget- Is being adopted by the government in
instances where the private sector ishesitant to spend and theeconomy needs a boost- Has an expansionary effect since it
increases the flow of money into theeconomy as a result of an increase ingovernment spending, the excessspending being derived from sources
other than taxes.
8/3/2019 The Government, Fiscal Policy and Taxation
16/35
2. Surplus Budget- Is being adopted by the government at
times when private spending is
excessive and threatens to beinflationary.
- Has a contracting effect since not all thetaxes collected from the people are
channeled back into the economicstream.- Depress economy
2 Types of Budget:
8/3/2019 The Government, Fiscal Policy and Taxation
17/35
Increasing Aggregate Demand
- The effect when there is an increase ingovernment purchases or cutting tax
rates.
8/3/2019 The Government, Fiscal Policy and Taxation
18/35
Decrease Aggregate Demand
-The effect when there is reducedgovernment demand or increasing tax
rates.
8/3/2019 The Government, Fiscal Policy and Taxation
19/35
Effects of a Budget:
A deficit and balanced budget have anexpansionary effect because they increase the flowof money into the economy as a result of increase
in government spending. Such excess spending arebeing derived from public borrowing other thantaxes.
Income spent by the government are derived fromtax collections. So the excess amount spent are
derived from public borrowing. The surplus budget has a contracting effect since
not all tax collections are spent and channeled backinto the economy.
8/3/2019 The Government, Fiscal Policy and Taxation
20/35
Taxation
The act of collecting taxes. This poweris vested in the government, whether
local or national.
8/3/2019 The Government, Fiscal Policy and Taxation
21/35
Taxes
are compulsory payments associatedwith income, consumption, or holding
of property that individuals andcorporations are required to makeeach year to governments.
8/3/2019 The Government, Fiscal Policy and Taxation
22/35
The need for taxation
1. As funds to maintain the variousfunctions of the government, and the
different activities it deems important.
2. To sustain viability of the government
in providing the necessary services forthe people.
8/3/2019 The Government, Fiscal Policy and Taxation
23/35
REQUISITES OF A VALIDTAXATION
The tax should be for a publicpurpose if the funds generated
through it is used to support thegovernment, like when it is used topay for the construction of public
buildings.
8/3/2019 The Government, Fiscal Policy and Taxation
24/35
The rule of taxation shall beuniform all taxable articles or kinds
of property belonging to the sameclass or category are taxed at thesame rate.
REQUISITES OF A VALID
TAXATION
8/3/2019 The Government, Fiscal Policy and Taxation
25/35
The person or property taxedshall be within the jurisdiction of
the government levying(imposing) the tax
when the state collects taxes onpersons, properties, or transactionswhere it has jurisdiction.
REQUISITES OF A VALID
TAXATION
8/3/2019 The Government, Fiscal Policy and Taxation
26/35
The assessment and collection ofcertain kinds of taxes mustprovide guarantees against
injustices to individualsif there is sufficient notice andopportunity for hearing is
provided to individual subjectsof taxation.
REQUISITES OF A VALID
TAXATION
8/3/2019 The Government, Fiscal Policy and Taxation
27/35
OBJECTIVES OF TAXATION
1. to raise funds taxation is the chiefmeans for raising funds to support the
government
2. to redistribute wealth some individualsamass great wealth during their lifetime,
and taxation is one way of redistributingthese wealth to the people. Examples aretaxes relating to estate and inheritance.
8/3/2019 The Government, Fiscal Policy and Taxation
28/35
3. to regulate consumption consumption of somegoods sometimes reach level that become harmfulto the society, so to limit the sale of these goods,
taxes are imposed.
4. to protect local industries imported goodssometimes enter our local markets to the detriment(harm, disadvantage) of local producers. If
imported goods are sold locally at lower process,the government may impose taxes that will raise itsselling price, and in effect, imported goods will beless attractive to domestic consumers.
OBJECTIVES OF TAXATION
8/3/2019 The Government, Fiscal Policy and Taxation
29/35
Classes of Taxes:
a.According to Subject personal, property, orexcisePersonal tax one imposed on individuals
residing within a specific territory,regardless of property or occupation.Example: Community tax levied by the
barangay to its residents.Property tax one levied on property
Excise tax
one imposed upon goodsconsumed, sold, or manufactured withina nation.
Example: excise tax levied on alcoholand cigarettes
8/3/2019 The Government, Fiscal Policy and Taxation
30/35
b. According to purpose revenue orregulatory
Revenue tax is imposed to collectrevenues for the general purposesof the government.
Example: income tax and salestax.
Regulatory tax
is imposed for aspecial purpose like the protectionof local industries from foreigncompetition.
Classes of Taxes:
8/3/2019 The Government, Fiscal Policy and Taxation
31/35
c.According to Authority Imposing Tax national and local taxes
National tax
one imposed by thenational government. Example:income taxes and customs duties
Local tax one levied in the
municipal, provincial, or barangaygovernments. Example: realproperty tax
Classes of Taxes:
8/3/2019 The Government, Fiscal Policy and Taxation
32/35
d.According to Determination of Amountspecific or ad valorem
Specific tax one assessed on the basis of atax per unit.
Ad valorem assessment is based on apercentage of the value of the item
Classes of Taxes:
8/3/2019 The Government, Fiscal Policy and Taxation
33/35
e.According to Who Bears the Burden director indirect
Direct when the person on whom the tax is
imposed absorbs the burden.Example: income tax
Indirect when the amount is paid by theperson other than the one whom it is
legally imposed.Example: VAT paid by the seller butpassed on to the buyer of the sellingprice.
Classes of Taxes:
8/3/2019 The Government, Fiscal Policy and Taxation
34/35
f. According to Graduation Rate proportional,progressive or regressive
Proportional
if it is based on a fixedpercentage of the amount of property,income, or other factors.
Examples: sales tax and real property taxProgressive when the rate increases as the
tax base increases.Example: income taxRegressive when the effective rate
decreases as the tax base increases.
Classes of Taxes:
8/3/2019 The Government, Fiscal Policy and Taxation
35/35
REQUISITES FOR AN IDEAL TAXSYSTEM:
Adequate adequate to raise money tosupport the activities of the government
Equitable tax system must be fair. It
must not benefit some groups orindividual at the expense of others.
Economically efficient a tax system must beable to support strong, stable economicgrowth, rather than becoming animpediment (hindrance) to investmentand a barrier to economic development.
Simple