publicfinance-mls2b
DESCRIPTION
A brief discussion of Public Finance prepared by the Group 7 of MLS 2B (Hermano, Galanto, Tabernilla, Magsayo, Balbini)TRANSCRIPT
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Members:Jinn Hermano Amerose Magsayo Kristelle Joy Tabernilla Charist Jean BalbiniAugustine Marie Galanto
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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.
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Government revenue
It is the money received by the government
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SourcesSources
Tax RevenueNon Tax Revenue
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SourcesTax 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.
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SourcesNon-tax Revenue
- income acquired by the government which was not generated from taxes
Fees Fines or Penalties Surplus from Public Enterprise Grants and Gifts
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Government Expenditures
It includes all the government's consumption, investment, and transfer payments.
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Government ExpendituresGovernment Expenditures
Exhaustive spending Transfer spending.
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Government ExpendituresGovernment Expenditures
Exhaustive spending:Exhaustive spending: refers to purchases refers to purchases made by a government for the production of made by a government for the production of public goods. public goods.
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Government ExpendituresGovernment Expenditures
Transfer spendingTransfer spending when government transfers when government transfers income to people to help them support income to people to help them support themselves. themselves.
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Government ExpendituresGovernment Expenditures Transfers can be subdivided into two:Transfers can be subdivided into two:
Cash transfers are cash payments, such as Cash transfers are cash payments, such as social security checks and welfare payments. social security checks and welfare payments.
In-kind transfers involve no cash payments but In-kind transfers involve no cash payments but instead transfer goods or services to recipients. instead transfer goods or services to recipients. Examples of in-kind transfers include food stamp Examples of in-kind transfers include food stamp coupons and Medicare. coupons and Medicare.
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The Threefold preview of Public Finance
Economic Efficiency(efficient allocation of resources) distribution of income Macroeconomics(macroeconomic stabilization)
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Importance of Public Finance
Taxation Protection of Infant Industries Provision Public Goods Side Effects of a Market Economy Redistribute of Income Equity
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Importance of Public Finance
Subsidies and grants Optimum utilization of resources Economic planning Providing employment
opportunities Market Failures
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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
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What AFFECTS Public Finance
Spending and Taxation Overall Performance of the economy
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MONETARY POLICY The process by which the monetary
authority of a country controls the supply of money.
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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.
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Goals of Monetary Policy
Higher economic growth Higher rate of employment Price Stability Neutrality of money Stability Instruments of monetary policy
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Fiscal policy
Government policy of changing its taxation and public expenditure programs intended to achieve its objective.
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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.
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The tools of fiscal policy
Public ecpenditure-revenue expenditure-capital expenditure
Pulbic revenue-Capital Receipt-revenue receipt -non-tax -tax - Direct and Indirect tax
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Commercial policy
Its is known as the export import policy of a country
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Importance of commercial policy
Economic development earning foreign exchange and developing
---industries regulate and promote foreign trade balance trade increase export and reduce imports
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Types of commercial policy
Free trade policy Protectionist trade policy
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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
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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
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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
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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
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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
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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
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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
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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
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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
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Problems in Government Expenditures
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Time lagsa 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 PaymentsAs borrowing increases,the government
have to pay higher interest rate payments to those who hold bonds.
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Inflationary PressureThe combination of quantitative easing
and very high levels of borrowing make inflation.
Crowding OutCrowding out can be defined at the
process of squeezing out the privately owned manufacturing sector by the expansion of the public sector.
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Trade-offsThere is a potential trade off between
unemployment and inflation.
Higher taxes in the futureThe government will need to reduce
borrowing as a % of GDP. It means future budgets will need to increase taxes or limit spending.
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Distribution of IncomeThe unequal distribution of household
or individual income across the various participants in an economy. It is often associated with the idea of income "fairness".
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Solutions
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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.
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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.
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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
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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.
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