Members:

Jinn Hermano
Amerose Magsayo
Kristelle Joy Tabernilla
Charist Jean Balbini
Augustine Marie Galanto

PUBLIC FINANCE
It is the study of the role of the government in the economy
It is concerned with the government's revenue and expenditure
and the effects of these activities to the economy and to the
society.

Government revenue
It is the money received by the government

Sources
Tax Revenue
Non Tax Revenue

Sources
Tax Revenue
- income acquired by the government through taxation
Capital Gains Tax
Documentary Stamp Tax
Donor's Tax
Estate Tax
Income Tax
Percentage Tax
Value Added Tax
Excise Tax
Withholding Tax on Compensation
Expanded Witholding Tax
Final Withholding Tax
Withoolding Tax on Government Money Payments.

Sources
Non-tax Revenue
- income acquired by the government which was not
generated from taxes
Fees
Fines or Penalties
Surplus from Public Enterprise
Grants and Gifts

Government Expenditures
It includes all the government's consumption,
investment, and transfer payments.

Government Expenditures
Exhaustive spending
Transfer spending.

Government Expenditures
Exhaustive spending: refers to purchases
made by a government for the production of
public goods.

Government Expenditures
Transfer spending when government transfers
income to people to help them support
themselves.

Government Expenditures
Transfers can be subdivided into two:
Cash transfers are cash payments, such as
social security checks and welfare payments.
In-kind transfers involve no cash payments but
instead transfer goods or services to recipients.
Examples of in-kind transfers include food stamp
coupons and Medicare.

The Threefold preview of Public Finance

Economic Efficiency
(efficient allocation of resources)
distribution of income
Macroeconomics
(macroeconomic stabilization)

Importance of Public Finance

Taxation
Protection of Infant Industries
Provision Public Goods
Side Effects of a Market Economy
Redistribute of Income
Equity

Importance of Public Finance

Subsidies and grants

Optimum utilization of resources
Economic planning
Providing employment
opportunities
Market Failures

Reasons why there is Growth of

Public expenditure
Expansion of State Activities

Internal Security
Defense Expenditure
Urbanization
Rural Development
Price Rise
Population
Social Welfare
Public Debt
Burden of Democracy
Economic Planning

What AFFECTS Public Finance

Spending and Taxation
Overall Performance of the economy

MONETARY POLICY
The process by which the monetary
authority of a country controls the supply
of money.

Types of monetary policy

Expansionary
- increases the total supply of money in
the economy more rapidly than usual
Contractionary
-expands the money supply than usual or
even shrinks it.

Goals of Monetary Policy

Higher economic growth

Higher rate of employment
Price Stability
Neutrality of money
Stability
Instruments of monetary policy

Fiscal policy
Government policy of changing its taxation
and public expenditure programs intended
to achieve its objective.

Importance of fiscal policy

Government activities are enlarged
Tax-revenue and expenditure accounts for
large proportion of GNP
It indicates the level of overall borrowings
by the government.
It is the indicator of fiscal health of the
economy.

The tools of fiscal policy

Public ecpenditure
-revenue expenditure
-capital expenditure
Pulbic revenue
-Capital Receipt
-revenue receipt
-non-tax
-tax
- Direct and Indirect tax

Commercial policy
Its is known as the export import policy of
a country

Importance of commercial policy

Economic development
earning foreign exchange and developing
---industries
regulate and promote foreign trade
balance trade
increase export and reduce imports

Types of commercial policy

Free trade policy

Protectionist trade policy

TOP 10 COUNTRIES IN THE WORLD

WITH HIGHEST EXPENDITURES(%
GDP 2013)
(source: http://data.worldbank.org/indicator)

1. NAMIBIA

27.6

2. DENMARK

26.7

3. NETHERLANDS

26.3

4. SWEDEN

26.2

5. SEYCHELLES

25.6

6. FINLAND

24.9

7. BELGIUM

24.4

8. ICELAND

24.3

9. FRANCE

24.1

10. SOUTH SUDAN

23.0

TOP 10 COUNTRIES IN THE WORLD

WITH LOWEST EXPENDITURE(%
GDP 2013)
(source: http://data.worldbank.org/indicator)

1. BANGLADESH

5.1

2. CAMBODIA

5.2

3. NICARAGUA

5.7

4. VIETNAM

6.2

5. ROMANIA

6.2

6. MACAO SAR, CHINA

6.5

7. EQUATORIAL GUINEA

6.7

8. UNITED ARAB EMIRATES

6.8

9. GAMBIA, THE

7.5

10. SUDAN

7.5

TOP 10 COUNTRIES IN THE WORLD

WITH HIGHEST REVENUE EXCLUDING
GRANTS (% GDP 2012)

(source: http://data.worldbank.org/indicator)
1. KIRIBATI
66.5
2. KUWAIT

61.7

3. NORWAY

49.1

4. OMAN

44.7

5. GREECE

42.7

6. FRANCE

42.4

7. AZERBAIJAN

41.8

8. BELGIUM

41.4

9. BOSNIA AND HERZEGOVINA

40.2

10. ANGOLA

40.2

TOP 10 COUNTRIES IN THE WORLD

WITH LOWEST REVENUE EXCLUDING
GRANTS (% GDP 2012)
(source: http://data.worldbank.org/indicator)

1. SAMOA

0.0

2. UNITED ARAB EMIRATES

3.2

3. NIGERIA

5.0

4. AFGHANISTAN

9.9

5. CENTRAL AFRICAN REPUBLIC

11.1

6. JAPAN

11.2

7. GUATEMALA

11.5

8. SIERRA LEONE

12.2

9. INDIA

12.4

10. PAKISTAN

12.7

Summary of Allocations:
Source: budgetngbayan.com by Department of Budget and Management

Budget by Sector
Budget by Expense Class
Budget by Region
Budget by Department and Special
Purpose Fund

Budget by Sector

http://budgetngbayan.com/summary-of-allocations/
2012Budget ng Bayan, a project of theDepartment of Budget and Management.
http://www.gov.ph/- official gazette

Budget by Expense Class

http://budgetngbayan.com/summary-of-allocations/
2012Budget ng Bayan, a project of theDepartment of Budget and Management.
http://www.gov.ph/- official gazette

Budget by Region

http://budgetngbayan.com/summary-of-allocations/
2012Budget ng Bayan, a project of theDepartment of Budget and Management.
http://www.gov.ph/- official gazette

Budget by Department and Special Purpose

Fund

TOP 10 DEPARTMENTS:
1. DepEd

292.7 B

2. DPWH

152.9 B

3. DND

121.6 B

4. DILG

121.1 B

5. DA

74.1 B

6. DOH

56.8 B

7. DSWD

56.2 B

8. DOTC

37.1 B

9. DOF

33.2 B

10. DENR

23.7 B

Problems in Government
Expenditures

Time lags
a delay between an economic action
and a consequence.There may be a
considerable time-lag between spending
and the benefits that arise.
Higher Debt Interest Payments
As borrowing increases,the government
have to pay higher interest rate payments
to those who hold bonds.

 Inflationary Pressure
The combination of quantitative easing
and very high levels of borrowing make
inflation.
Crowding Out
Crowding out can be defined at the
process of squeezing out the privately
owned manufacturing sector by the
expansion of the public sector.

 Trade-offs
There is a potential trade off between
unemployment and inflation.

Higher taxes in the future

The government will need to reduce
borrowing as a % of GDP. It means future
budgets will need to increase taxes or limit
spending.

 Distribution of Income
The unequal distribution of household
or individual income across the various
participants in an economy. It is often
associated with the idea of income
"fairness".

Solutions

 Expenditure Planning Process

-Formulating & creating spending process maintains conditions conducive to
economic development.

Truth in Accounting
-Truth in Accounting believes truthful accounting is the key for citizens,
legislators, and the press to clearly understand the truth about
government finances.

 Balanced private & public sector spending

-For economic growth both private investment and

government expenditure should complement each other.

Interest Rate Manipulation

-Maintaining

low interest rates is another way governments

seek to stimulate the economy, generate tax revenue and,
ultimately, reduce the national debt.

 Spending Cuts and raise Taxes

-a combination of deep budget cutsand increase in

Tax to reduce government debt.

Bailout
-Getting rich nations to forgive your debts or hand you

cash is a strategy that has been employed more than a

few times

 Monetary Policy
-Monetary policy (Contractionary) is the most important tool for
maintaining low inflation. Expansionary monetary policy also help
attain full employment and equal income distribution.

Transfer payment
-It is a redistribution of income in the market system or
designating tax systems.