MECHANICS OF GOVERNMENT

SPENDING

FUNCTIONS OF DEPARTMENT OF

BUDGET AND MANAGEMENT

Formulates the overall resources application strategy to match the government’s macroeconomic policy;

Prepares the medium-term expenditure plan, indicating the programming, prioritization, and financing of capital investment and current operating expenditure requirements of medium-term sectoral development plans;

Undertakes the formulation of the annual national budget in a way that ensures the appropriate prioritization and allocation of funds to support the annual program of government;

Develops and administers a national accounting system essential to fiscal management and control;

Conducts a continuing study of the bureaucracy and assesses as well as makes policy recommendation on its role, size, composition, structure and functions to establish a government bureaucracy imbued with a spirit of public service;

Establishes the rules and procedures for the management of government organization resources;

Conceptualizes and administers the government’s compensation and position classification plan; and

Monitors and assesses the physical as well as the financial operations of local government units and government-owned and/or controlled corporations.

The national budget is the plan for a country’s expenses for a given, is prepared with consultations from the different departments of the national government to ensure that the budget designated would be appropriate and sufficient for the needs of the department and its attached offices.

After the national budget has been prepared, it will be submitted to the Congress of the Philippines, and the legislative body will then conduct hearings on the budget, to determine whether the requested amount is justifiable.

The Constitution of the Republic specifically gives Congress the power to approve the national budget. Congress will request the respective department heads and executive officials to attend these hearings and justify the requested funds themselves.

After the national budget has been approved, it will be submitted to the President, and his approval makes the national budget official- will be the basis for how the government will spend its money for a given year.

Commission on Audit(COA) makes sure that the money is spent the way it was appropriated as indicated in the Philippine Constitution.

NATIONAL BUDGET CHART

FORMULATION/PREPARATION EXECUTIVE DEPARTMENT

PRESIDENT AND THE DEPARTMENT OF BUDGET AND MANAGEMENT

APPROVAL/CHECKINGLEGISLATIVE DEPARTMENT OR

CONGRESS:SENATE AND HOUSE OF

REPRESENTATIVESIMPLEMENTATION

VARIOUS DEPARTMENTS AND AGENCIESOF THE NATIONAL GOVERNMENT

EXAMINATION/AUDITINGCOMMISSION ON AUDIT

The Commission on Audit, after studying how the funds were used, is required to submit a report to the president about the matter, and recommend measures to ensure better government spending in the future.

The way any government would spend would naturally be based on the needs and wants of its populace.

TAX AS A MAIN SOURCE OF

GOVERNMENT REVENUE

Direct tax - when it is deducted directly from income; or

Indirect tax - when it is added to the price of goods and services, by which it becomes a tax on consumption.

PRINCIPLES OF TAXATION

1. Taxation must be productive.

2. Taxation must be equitable.3. Taxation must be flexible.

KINDS OF TAXES

Personal Income Taxes – This are the tax derived from the income of individuals and residents of a country.

Corporate Income Tax – This tax is levied against income but not of the individual, but the corporations and businesses, and comes with a different computation.

Sales Tax – This is the tax for merchandise or items bought, sometimes ranging from 3 percent to 4 percent.

Value –Added Tax – This is like a national sales tax, and it collects taxes at various stages of production. Value-added tax collects from the production of raw materials to the point of sales.

Property Tax – The government requires an annual tax to be paid by property owners for each piece of property(real estates and/or building) that they own.

Capital Gains Tax – This is a tax on the income gained from the sales of real estate and other capital assets.

Tariff – This is tax placed on foreign goods that enter a country.

TYPES OF TAXES

1. A progressive tax increases as the income increases. This type of tax is burden for rich.

2. A regressive tax decreases as the income increases. This type of tax is a burden for the poor.

3. A proportional tax remains the same regardless of the income

COMPUTING INCOME TAX

Income that can be taxed includes salaries, wages, bonuses, allowances, tax reimbursements, and fringe benefits.

CATEGORY CATEGORY EXEMPTION

Single Individuals P 20,000

Heads of Families P 25,000

Married Individuals P 32,000

For Each Dependent (Of Head of Families or Married Individuals)

P 8,000

Income tax returns are filed on or before the fifteenth day of April of each year and are usually automatically filed by the employer for the employee.

Situation 1: Mr. Gomez who is head of

a family and has three children earned P 100,000 for the year.

Computation: Gross Yearly Income:P100,000.00Less: Exemptions: 25,000.00(as head

of family) 24,000.00(3 children at P8000 for each dependent) ========Taxable Income: P51,000.00

This means that the income to be taxed amounts to P51,000.00. Looking at our given tax table, we can see that this amount falls under the level

Over 30,000 but not over 70,000

The applicable rate for this is P2,500+15% of the excess over P30,000

So let us now compute:

At P51,000 taxable income, the excess over P30,000 is P21,000. (P51,000 minus P30,000) 15% of P21,000 is P3,150 P2,500 + P3,150 = P5,650

Mr. Gomez will pay an income tax of P5,650 for the year.

Situation 1: Ms. Bonilla who is

individual earned P95,000 for the year.

Computation:

Gross Yearly Income: P 95,000.00Less: Exemptions: 20,000.00 (single

individual) ========Taxable Income: P75,000.00

This means that the income to be taxed amounts to P60,000.00. Looking at our given tax table, we can see that this amount falls under the level

Over 70,000 but not over 140,000

The applicable rate for this is P8,500 + 20% of the excess over P70,000

So let us now compute:

At P75,000 taxable income, the excess over P70,000 is P5,000. (P75,000 minus P70,000) 20% of P5,000 is P1,000 P8,500 + P1,000 = P9,500

Ms. Bonilla will pay an income tax of P9,500 for the year.

THE ENDTHANK YOU FOR LISTENING!