1.

SOURCES OF FUNDS for theSOURCES OF FUNDS for the National GovernmentNational Government
2. Sources of Funds:Sources of Funds: 1. Tax Revenues 2. Non-Tax Revenues such as fees to be collected
3. 2) borrowings from both domestic and foreign sources; and 3) withdrawals from available cash balances
4. TaXTaX A tax is a compulsory contribution mandated by law and exacted by the government for a
public purpose. The major tax collecting agencies of the national government are the Bureau of Internal
Revenue and the Bureau of Customs.
5. Tax revenues include the following:Tax revenues include the following: Income taxes - Individuals
Corporations Miscellaneous Property taxes - Real property Property transfers Special assessments
Special education tax Stock transfers Miscellaneous Taxes on goods and services - Excises on imports
Excises on domestic articles Business taxes and licenses Franchise tax Motor vehicle taxes Miscellaneous
6. Taxes on international trade and transactions - Import duties Export and premium duties Foreign
exchange Miscellaneous Other taxes - Documentary stamp taxes Charges on forest products Wharfage
fees and charges Immigration tax Mining tax Community tax Miscellaneous - Local Government Shares on
on Internal Revenue Collections Miscellaneous - Local Government Shares in the Proceeds from the
Development and Utilization of the National Wealth Miscellaneous
7. non-tax revenues are the following:non-tax revenues are the following: Operating and service income
- Government services Government business operations Interests Commissions Insurance/fiduciary bond
premiums Rents Trading/production Miscellaneous
8. Income from public enterprises/investments - Interest on loans Dividends on stocks Interest on bonds
Interest on treasury notes/bills Interest on promissory notes Interest on receivables, acceptances and
discounted notes Gain on sale of acquired assets/stocks/bonds Royalties Government share from toll fees
and casino earnings Miscellaneous
9. Miscellaneous income - Sale of goods/merchandise confiscated Sale of scrap construction materials
Gain on foreign exchange Contributions Inventory adjustments Sweepstakes Sale of waste materials
Miscellaneous
10. Sale of Assets - Public domain Fixed assets Gain on sale of fixed assets Scrap of fixed assets
Intangible assets Investments/stocks/bonds Gain on sale of investments/stocks/bonds Grants and aids From foreign countries From other levels of governments Domestic
11. What are the desirable features of aWhat are the desirable features of a tax system?tax system? A
tax system should be revenue- productive; simple and easy to administer, equitable, and
progressive.
12. What are the government's current efforts toWhat are the government's current efforts to improve tax
collections?improve tax collections? The national government has continuously expended an all-out
effort to strengthen its revenue-generating capability through legislative and administrative reforms.
Recently, the government came up with a comprehensive measure to overhaul the tax system to bring
in badly needed revenues for the government. Called the Comprehensive Tax Reform Program (CTRP),
the new tax measure has three principal components, namely, a) income tax reform; b) excise tax reform;
and, c) fiscal incentives reform. The CTRP aims to widen the tax base, simplify the tax structure to
minimize leakages, undeclared revenues, overstated deductions and corruption to make the system more
elastic and easier to administer.
13. BorrowingsBorrowings Borrowings refer to funds obtained from repayable sources, such as loans
secured by the government from financial institutions and other sources, both domestic and foreign, to
finance various government projects and activities. The government borrows to provide for the
requirements of capital projects and to support priority programs and projects. Relying solely on domestic
resources will limit governments capability to provide the needed support. Domestic resources is
insufficient to finance priority programs and projects.
14. domestic borrowings & foreigndomestic borrowings & foreign borrowingsborrowings Domestic
borrowings are funds obtained from sources within the country. Domestic borrowings of the national
government are usually made through the auction of treasury bills, notes and bonds to the public. Foreign
borrowings, on the other hand, are funds obtained from sources outside the country, such as Asian
Development Bank (ADB), International Bank for Reconstruction Development (IBRD), Overseas Economic
Cooperation Fund (OECF), etc. Foreign borrowings can be obtained through loans secured from foreign
financial institutions or through the flotation of government securities in the international market.
15. Why does the government borrow?Why does the government borrow? The government borrows from
any of the following reasons: to finance national government deficits; to obtain foreign exchange; to
secure financing at more favorable terms than the opportunity cost of revenues; to take advantage of
benefits attached to the funds, e.g. technology; and, to balance the timing of resources with the project
gestation and repayment of benefit
16. What are constructive cashWhat are constructive cash receipts?receipts? Constructive cash receipts
are foreign loan proceeds in the form of goods and services for which no cash is remitted to the national
treasury. Such goods or services have been paid directly by the lender to the supplier.

17. DIMENSIONS OF THEDIMENSIONS OF THE BUDGETBUDGET

18. The budget possesses various dimensions. It can be classified according to the following: By Sector, By
Cost Structure, By Expense Class and By Object, By Region, By Type of Appropriation.
19. A. By SectorA. By Sector The budget contains various type of expenditures. They are for: 1. Social
Services Expenditure; 2. Economic Services Expenditure; 3. Defense Expenditure; 4. General Public
Services; and 5. Debt Burden
20. B. By Cost StructureB. By Cost Structure 1. For General Administration & Support Services or Overhead
Expenses 2. As Support to Operations for the facilitative functions and services, staff and technical support
3. For Operations of regular activities addressing agency mandate Example: Production of goods, delivery
of pubic services, and regulation, etc. 4. For Projects such as homogenous group of activities that result in
the accomplishment of identifiable output within a designated period, whether foreign or locally funded
21. C. By Expense Class & By ObjectC. By Expense Class & By Object 1. Current Operating Expenditures for
personal services, maintenance and other operative expenses (MOOE) 2. Capital Outlays for investments,
loans, livestock and crops, land/land improvements, buildings/structures, furniture/fixtures
22. D. By Major Recipient ofD. By Major Recipient of GovernmentGovernment The major recipients of the
budget are:
23. 1. The NGAs (National Government Agencies) they include all agencies with the Executive, Legislative
and Judicial Branches of government 2. The LGUs (Local Government Units) funding is released in the
form of IRAs (Internal Revenue Allotments), special shares in national proceeds, credit thru the MDF
(municipal development fund), and premium subsidies for local insurance
24. 3. The GOCCs (Government Owned and Controlled Corporations) funding is through subsidies,
equity and net lending
25. E. By Regional AllocationE. By Regional Allocation The Budget is apportioned for each of the various
regions of the country.
26. F. By Type of AppropriationF. By Type of Appropriation The budget is further classified into different
types, namely: 1. General Appropriations 2. Supplemental Appropriations
27. 3. Continuing Appropriations refer to appropriations available to support obligations for a specified
purpose or project, such as multi-year construction projects which require the incurrence of obligations
even beyond the budget year. Examples of continuing appropriations are those from existing laws such as :
RA 8150, otherwise known as the Public Works Act of 1995; and Republic Act No. 6657 and Republic Act
8532 which set funds specifically for the Agrarian Reform Program (ARP). Currently, appropriations for
capital outlays and maintenance and other operating expenses are considered as continuing
appropriations but only for a period of 2 years. 4. Automatic Appropriations debt service-interest
payments, the Internal Revenue Allotment or IRA which is the share of local government units (LGUs) from
national government revenue and the Retirement and Life Insurance Premiums (RLIP) which is the share of
the national government in the premium payments to GSIS for the life insurance and retirement benefit
fund of government employees.
28. The budget may increase or decrease depending on the governments policy of how much it will infuse
into the economy. Maturing of a countrys debt determines the size of the budget.
29. Obligations Budget vs. Cash BudgetObligations Budget vs. Cash Budget Obligations budget are for
expenditures incurred for the year and is to be paid in said year. This can also be for expenditures incurred
for the year to be paid next year. Aside from this, it is also allocated for interest payments. Cash budgets
are for expenditures incurred for next year. It can also be allocated for expenditures in previous years, and
is also allocated for interest payments.
30. Priority Development Priority Development Assistance Fund (PDAF)Assistance Fund (PDAF)
31. PDAFPDAF The Priority Development Assistance Fund is a lump-sum appropriation in the annual
General Appropriations Act to fund the priority development programs and projects of the government .
32. PDAFPDAF is used to finance priority development programs and projects identified by the Members
of Congress
33. For the LGU, the amount is released to the Department of Budget and Management as the fund
administrator, which in turn releases the corresponding amount to the LGU beneficiary of the programs
and projects chosen by the legislator
34. How Pork Barrel is createdHow Pork Barrel is created
35. How Pork Barrel is createdHow Pork Barrel is created Step 1: PREPARATION Budget Call Out The
Executive calls out all government agencies and departments to submit a budget for the next year
Departments and their line agencies submits their budget Setting of overall budget policy Agency-level
budget formulation Executive review, deliberation and approval Preparation of budget documents and
submission to Congress
36. Step 2: Authorization: Prepared budget is transmitted to Legislative Department for review and
approval A Bicameral Committee Conference will be held At this point, Members of the House of

Representatives insert some PDAF line items and intelligence funds to some departments and agencies
Approval of the Budget (General Appropriations Act)
37. Step 3: BUDGET EXECUTION The GAA serves as the legal basis which allows for the use of funds
from the national treasury for specified expenditure items provided therein. However, the existence of a
GAA alone does not imply that agencies can start utilizing and drawing funds to finance their programs
and activities. Agencies need to secure an allotment to be able to obligate amounts specified in their
budgets; cash allocation should also be secured before disbursements can be made to settle these
obligations. The budget execution phase is concerned with these operational aspects of budgeting which
facilitates the translation of appropriations to disbursements, or more specifically the release of funds
through allotments and Notice of Cash Allocation (NCA).
Fiscal policy refers to the "measures employed by governments to stabilize the economy, specifically by
manipulating the levels and allocations of taxes and government expenditures. Fiscal measures are
frequently used in tandem with monetary policy to achieve certain goals." [1] In the Philippines, this is
characterized by continuous and increasing levels of debt and budget deficits, though there have been
improvements in the last few years.[2]
The Philippine governments main source of revenue are taxes, with some non-tax revenue also being
collected. To finance fiscal deficit and debt, the Philippines relies on both domestic and external sources.
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 its early years. However, the
implementation of the 1997 Comprehensive Tax Reform Program and the onset of the Asian financial
crisis resulted to a deteriorating fiscal position in the succeeding years and administrations. The Estrada
administration faced a large fiscal deficit due to the decrease in tax effort and the repayment of the Ramos
administrations 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.
Revenues and Funding
The Philippine government generates revenues mainly through personal and income tax collection, but 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[edit]
Tax collections comprise the biggest percentage of revenue collected. Its biggest contributor is the Bureau
of Internal Revenue (BIR), followed by the Bureau of Customs (BOC). Tax effort as a percentage of GDP has
averaged at roughly 13% for the years 2001-2010.[5]
Income Taxes[edit]
Income tax is a tax on a person's income, wages, profits arising from property, practice of profession,
conduct of trade or business or any stipulated in the National Internal Revenue Code of 1997 (NIRC), less
any deductions granted.[6] Income tax in the Philippines is a progressive tax, as people with higher incomes
pay more than people with lower incomes
The top rate was 35% until 1997, 34% in 1998, 33% in 1999, and 32% since 2000. [7][8]
In 2008, Republic Act No. 9504 (passed by then-President Gloria Macapagal-Arroyo) exempted minimum
wage earners from paying income taxes.[9]
E-VAT[edit]
The Expanded Value Added Tax (E-VAT), 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. Some items which are subject to E-VAT include petroleum, natural gases, indigenous fuels,
coals, medical services, legal services, electricity, non-basic commodities, clothing, non-food agricultural
products, domestic travel by air and sea.[10]
The E-VAT has exemptions which include basic commodities and socially sensitive products. Exemptible
from the E-VAT are:[11]
1. Agricultural and marine products in their original state (e.g. vegetables, meat, fish, fruits, eggs and
rice), including those which have undergone preservation processes (e.g. freezing, drying, salting,
broiling, roasting, smoking or stripping);
2. Educational services rendered by both public and private educational institutions;
3. Books, newspapers and magazines;
4. Lease of residential houses not exceeding 10,000 monthly;

5. Sale of low-cost house and lot not exceeding 2.5 million

6. Sales of persons and establishments earning not more than 1.5 million annually.
Tariffs and Duties[edit]
Second to the BIR in terms of revenue collection, 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 (OFWs) and former Filipino citizens are exempted from
paying duties and tariffs.[12]
Non-Tax Revenue[edit]
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.
[13]

The Bureau of Treasury[edit]

The Bureau of Treasury (BTr) manages the finances of the government, by attempting to maximize revenue
collected and minimize spending. The bulk of non-tax revenues comes from the BTrs income. Under
Executive Order No.449, the BTr 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[14]) through the purchase and sale of government bills and bonds. [15]
Privatization[edit]
Privatization in the Philippines occurred in three waves: The first wave in 1986-1987, the second during
1990 and the third stage, which is presently taking place. [16] The governments Privatization Program is
handled by the inter-agency Privatization Council and the Privatization and Management Office, a subbranch of the Department of Finance.[17]
PAGCOR[edit]
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.[18]
Spending, Debt, and Financing
Government Spending and Fiscal Imbalance[edit]
In 2010, the Philippine Government spent a total of 1.5 trillion and earned a total of 1.2 trillion from tax
and non-tax revenues, thus resulting to a total deficit of 314.5 billion. [5]
Despite the national deficit of the Philippines, the Department of Finance reported an average of 29.6
billion in Local Government Unit (LGU) surplus, which is mostly due to an improved LGU financial
monitoring system which the government implemented in the recent years. Efforts of the monitoring
system include "debt monitoring and creditworthiness monitoring system, effective mobilization of second
generation funds (SGF) to promote LGU development, and the implementation of a Land Administration
and Management Project (LAMP2) which received a 'very good' rating from the World Bank (WB) and
Australian Agency for International Development (AusAid)."[20]
Microfinance management in the Philippines is improving substantially. In 2009, the Economist Intelligence
Unit "recognized the Philippines as the best in the world in terms of its microfinance regulatory
framework." The DOF-National Credit Council (DOF-NCC) focused on improving the state of local
cooperatives by developing a supervision and examination manual, launching advocacies for these
cooperatives, and pushing for the Philippine Cooperative Code of 2008. A standardized national strategy
for microinsurance and the provisions of grants and technical assistance were formulated. [20]
Financing and Debt[edit]
Aside from Tax and Non-Tax Revenues, the government makes use of other sources of financing to support
its expenses. In 2010, the government borrowed a total net of 351.646 billion for financing: [21]
Domestic Sources
External Sources
Gross Financing

489.844 billion

257.357 billion

Less: Repayments/Amortization

271.246 billion

124.309 billion

Net Financing

218.598 billion

133.048 billion

Total Financing
External Sources of Financing are:[21]
1. Program and Project Loans - the
government offers project loans to
external bodies and uses the proceeds to
fund domestic projects like infrastructure,

2.
3.
4.
5.

351.646 billion
agriculture, and other government
projects.[20]
Credit Facility Loans
Zero-coupon Treasury Bills
Global Bonds
Foreign Currencies

Domestic Sources of Financing are[21]

1. Treasury Bonds
2. Facility loans
3. Treasury Bills

4. Bond Exchanges
5. Promissory Notes
6. Term Deposits

In 2010, the total outstanding debt of the Philippines reached 4.718 trillion: 2.718 trillion from
outstanding domestic sources and 2 trillion from foreign sources. According to the Department of Finance,
the country has recently reduced dependency on external sources to minimize the risks caused by changes
in the global exchange rates. Efforts to reduce national debt include increasing tax efforts and decreasing
government spending. The Philippine government has also entered talks with other economic entities, like
the ASEAN Finance Ministers Meeting (AFMM), ASEAN+3 Finance Ministers Meeting (AFMM+3), Asia-Pacific
Economic Cooperation (APEC), and ASEAN Single-Window Technical Working Group (ASW-TWG), in order to
strengthen the countries' and the region's debt management efforts
https://www.academia.edu
Sources of Fund of National Budget
The Gross National Product or GNP is one way of measuring the status of a countrys economy. The Gross
Domestic Product or GDP and the Dollar Remittances of Overseas Filipino Workers are also barometers in
determining the economic situation of the country.
Here are some of the most important sources of funds for the National Budget the many taxes that
people pay:
Income Tax
Foremost and primary source of fund for the National Budget is the Income Tax. It is based on citizenship,
residence and source of income. This tax is imposed to the Filipino people, the state, tourists and
corporations.
Excise Tax
Excise tax is the tax collected to the producers, retailers, businesses that sell special products such as
cigar & cigarette, gasoline, petroleum, cars, mineral products and others.
Inheritance Tax
Inheritance Tax is another source of fund for the National Budget. It is the amount collected to people who
inherited properties based on the amount or appraisal of the inheritance.
Percentage Tax
Percentage Tax is the amount imposed by the Bureau of Internal revenue to contractors, hotel owners,
restaurants, recreational institutions, winnings such as Lotto and products from the forests.
Miscellaneous Tax
Miscellaneous Tax is another source of fund for the National Budget. It is the amount collected to banks,
premium insurance, franchise and financial companies.
Value Added Tax
Value Added Tax or VAT is the tax from all the products being sold, exchanged and bartered; commercial
services; and, importation of products. Commercial ads for Television and radios, videooke bars, malls,
restaurants and many others pay Value Added Tax. The amount collected is 10% of the product or service
price.
Residence Tax
Residence Tax is the tax paid by Filipinos every year. It is usually obtain from the Municipal/city hall. The
amount paid is based on the income of the individual.
Others
The film-making industry also pays taxes and all citizens with motor vehicle pay taxes by registering their
vehicle to the Land Transportation Office or LTO.
*Expanded Value Added Tax or E-VAT
Expanded Value Added Tax or E-VAT is an additional burden to the tax-paying public. The BIR imposed 12%
additional tax to selected services and products such petroleum products and fastfood chains. The amount
collected is not included to the National Budget but it goes straight to the President's Special Fund.
LEI are providing, on a demand driven basis, overall guidance and advice, training, access to resources and
transfer of innovative technology and knowhow. This includes the following:
Revenue Systems providing an integrated computerized system for tax and revenue collection the Enhanced Tax Revenue Assessment System (ETRACS).
Geographic Information System providing a Unified Land Information System (GIS-ULIS).
Combining the spatial and textual land related information from various national government
agencies, the Unified Land Information System underpins the real property tax and business
revenue systems and is well structured to support through imaging and GIS functions, other land
management functions of the LGUs including physical planning, disaster management and social
mapping. At the core of the system is the Digital Cadastral Data Base (DCDB).
Land Administration and Management System (LAMS) Providing the Department of Environment
and Natural Resources (DENR) and LGUs with an information system framework for the continual

integration of the whole of government land information. This promotes the sharing of spatial,
textual, imaging and other land related data.
Valuation Database Information System (VDIS) - This sales system is used by Assessors to assist in
preparing and explaining a new general revision of the Schedule of Market Values.
Land Management and Investment Planning Mature LGUs will be assisted in updating and revising
their Comprehensive Land Use Plans (CLUP) and their Comprehensive Investment Plan. Unified land
information system outputs from digital cadastral database (DCDB) thematic maps will allow LGUs
to formulate a physical framework for land use and development, prioritize interventions, programs
and projects to attain these plans.
Land Tenure Profiling providing assistance in land tenure profiling. Assisting LGUs to prepare a
land records inventory to determine the extent of government owned lands, titled and untitled
lands