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MONEY MATTERS
THE GOLDEN RULE:
Comparative Philippine and China Central and Local
Government Share in Revenue and Expenditure
The Philippines
China
(2007; in Million Pesos)
(2004 ; 100M Yuan)
Central*
REVENUE
% to Total
Expenditure
% to Total
Local**
Central
Local
1,096,875.01 234,760.08 14,503.10 11,893.37
82.37%
17.63%
54.90% 45.10%
1,023,071.18 194,736.81
7,894.08 20,592.81
84.01%
15.99%
27.70% 72.30%
Net of IRA of P146,591.95 million
**Inclusive of IRA of P146,591.95 million
Sources: Philippine Commission on Audit 2007 Financial Reports; National Bureau of Statistics of China
United States Central and Local Government
Share in Revenue and Expenditure
United States
(2007; in $Billion)
Central
Revenue
% to Total
Expenditure
% to Total
Source: usgovernmentexpenditure.com
Local
2.568
2.165
54.26%
45.74%
2.568
2.196
55.41%
44.59%

The federal government plays a small overall
role in raising revenues and expenditures
compared to the average OECD country. Not
including social security funds, the bulk of
spending on programmes and policies occurs
in the Länder and municipalities.
Administrative Divisions





The Philippines
Regions (17)*
Provinces (80)
/Cities(120)
Districts (219)*
Towns (1,514)
Villages
(Barangays)
(46,000) 1,956
people per




China
Regions
(Provinces) (33)
Provinces(Prefect
ure)/ City Level
(333)
Districts (County
Level) (2,872)
Township Level
(40,544)
Sources: Wikipedia; National Statistical Coordination Board; Country Reports-United
Nations Economic and Social Commission for Asia and the Pacific
*Under the National Government
General Functions of Local Governments
The Philippines





Efficient Service Delivery
Provide Agricultural and Fishery Support
Promote Health and Social Welfare
Local Business Development
Small Infrastructure Construction and
Development
 Tourism Development
Sources: Country Report-United Nations Economic and Social Commission for Asia and
the Pacific; Philippine Local Government Code
General Functions of Local Governments
China
 Carry out laws and resolutions of higher-level governments
 Govern the economy, education, science, culture, health,
sport, environment, natural resource protection, finance,
civil administration, public security, minority nationality,
judicature, supervision and family planning
 Exercise personnel appointment and dismissal, training,
performance evaluation, reward and punishment in
administrative organizations
 Maintain social stability
Source:
Protect
citizens’Nations
civil Economic
rightsand Social Commission for Asia and the Pacific-China
Country Report-United
 Protect public and legal private property
 Protect the lawful rights and interests of economic
Organizations Maintained/Run at the Regional Level
China
Agriculture and Forestry
Justice Department
Department
Land and Resources Department
Audit Department
Labour and Social Security
Civil Affairs Department
Department
Construction Department
Legislative Affairs Office
Communications Department
Local Taxation Bureau
Culture Department
Oceanic and Fishery Bureau
Commerce Department Provincial
Overseas Chinese Affairs Office
General Office
Public Security Department
Culture Heritage Bureau
Personnel Department
Development Planning Commission Population and family planning
Drug Administration
Commission
Economic and Trade Commission
Press and Publication Bureau
Environmental Protection
Prices Bureau
Department
Prison Affairs Bureau
Education Department
People’s Air Defense Office
Finance Department
Quality Supervision Bureau
Source: Country Report-United Nations Economic and Social Commission for
Foreign Trade and Economic
Radio and Television Bureau
Asia and the Pacific-China
Cooperation Department
Science and Technology
The Philippines
China
Local Taxes such as:
Local Taxes such as:
Business Tax
Business Tax
Real Property Tax
Income Tax of enterprises subordinate to the
Transfer Tax
local government
Franchise Tax
Personal income tax
Printing and Publication Tax
Tax on the use of urban land
Amusement Tax
Tax on the adjustment of the investment in fixed
Community Tax
assets
Share in National Taxes
Tax on town maintenance and construction
Internal revenue Allotment (IRA) representing
Tax on real estates
40% of internal revenue collections based on the Tax on the use of vehicle and ships, stamp tax,
third preceding year (Regional distribution is as
slaughter tax
follows: Provinces 23%; Cities 23%; Municipalities Tax on agriculture and animal husbandry
34%; and Barangays 20%
Tax on special agriculture products
Non-Tax Revenue
Tax on the occupancy of cultivated land, contract
Share in national wealth exploitation in their
tax
area
Shared Taxes
Share in the earnings of government agencies or 25% of the value added tax
government-owned or controlled corporations
50% of the tax on stock dealing (stamp tax)
engaged in the utilization and development of
Tax on resources other than the ocean
national wealth in their area based on the
petroleum resources
following: 1% of the gross sales or receipts of the Non-Tax Revenue
preceding calendar year or 40% of mining taxes, State-owned assets profit
Reportssubsidies
China andto
the
Philippines-United
Nations
royalties, forestry or fishery charges andSources:
such Country
Planning
loss-suffering
state-owned
Economic and Social Commission for Asia and the Pacific
other taxes, fees or charges including related
enterprises
Comparative Local Government Revenue –Share (in Percent)
Tax
China
Philippines
Central Taxes
Domestic Excises
0
0
Customs Duties
0
0
VAT and Excises on Imports
0
0
Local Taxes
City and Township Land Use Tax
100
100
Farmland Occupation Tax
100
n.a.
Fixed Assets Investment Orientation Tax
100
n.a.
Land Appreciation Tax
100
100
House Property Tax
100
100
Urban Real Estate Tax
100
n.a
Vehicle and Vessel Use tax
100
0
Vehicle and Vessel License Plate Tax
100
0
Deed Tax, Slaughter Tax, Banquet Tax
100
100
Shared Taxes
Domestic VAT
25
40
Business Tax – if paid by railroads, head ofcs of
0
100
banks
100
100
Business Tax, otherwise
40
(IRA) 40
Personal Income Tax
40
(IRA) 40
Corporate/Enterprise Income Tax
0
(IRA) 40
Income Tax on Foreign Banks
100
(IRA) 40
Income Tax on Foreign Non-Banks
0
40
Resource Tax – if paid by off-shore oil companies
100
40
Resource Tax –Otherwise
0
0
Sources: Intergovernmental Fiscal Relations in China, Analisa
City Maintenance – if paid by railroads
100et.al (2002); Phil.
0
Fedelino and Teresa Ter-Minnassian; Ahmad
City Maintenance – Otherwise
12
0
Local Government Code
United States : Sources of State Revenue
Source
Percentage (US
Average)
General Sales
Tax
23.5%
Selective Sales
Tax
Source: Tax Foundation Report : stateline.org
10.9%
Property Taxes
30.1%
License and
Other Fees
8.2%
Bureau of Internal Revenue Organizational
Structure Per EO No. 306
return to original image.
Expenditure Allocation
The Philippines
China
The general expenditure which local
The local financial expenditure
governments incur is consist of:
covers many areas shown in the
 Personal Services (45-55% of the
next slide: China Local Financial
total budget)
Expenditure
 Infrastructure development and
maintenance
 The cost of delivering basic
services out of local government
existence
 Payments of debts and other
mandatory
obligations
Sources:
Country Reports
China and the Philippines-United Nations Economic and Social Commission
for Asia and the Pacific
Expenditure Allocation
China
Expenditure for armed police Expenditure for operating
troops
expenses of education
Expenditure for capital
Expenditure for operating
construction
expense s of department of
Expenditure for
sciences
comprehensive development Expenditure for operating
of agriculture
expenses of department of
Expenditure for circulating
tax, etc.
funds
Expenditure for price subsidies
Expenditure for city
Expenditure for public security
maintenance
agency, procuratorial agency
Expenditure for developing
and court of justice.
Source: Country
Report China-United
Nations Economic
land and sea area
Expenditure
for public
healthand
Social Commission for Asia and the Pacific
Expenditure for foreign affairs Expenditure for pensions and
China Central and Local Government Main Items
Revenue Breakdown (in percent)
Revenue Item
Central
Local
Governm Governme
ent
nts
Total Taxes
58.62% 41.38%
Consumption Tax
100.00%
0.00%
Value Added Tax
73.34% 26.66%
Business Tax
3.10% 96.90%
Consumption Tax and Value Added
100.00%
0.00%
Tax on Imports
Resource Tax
0.00% 100.00%
Urban Maintenance and
0.64% 99.36%
Development Tax
Company Income Tax
59.67% 40.33%
Personal Income Tax
40.00%
Source: 60.00%
National Bureau of Statistics
of China
Urban Land Using Tax
0.00% 100.00%
China Central and Local Government Main Items
Revenue Breakdown (in percent) cont.
Revenue Item
Central
Local
Governm Governme
ent
nts
Tax Rebate to Foreign Trade
84.28%
15.72%
Company
Stamp Tax on Security Exchange
97.00%
3.00%
Vehicle Purchase Tax
100.00%
0.00%
Subsidies for the Losses of the
State-owned Enterprises
16.50%
83.50%
Industry Enterprises
51.87%
48.13%
Commercial Enterprises
0.00% 100.00%
Grain Enterprises
0.00% 100.00%
Foreign Trade Enterprises
71.24%
28.76%
Source: National Bureau of Statistics of China
Agriculture, Forest, Aquaculture
84.65%
15.35%
Comparative Revenue Effort as % of GDP
REVENUE EFFORT (% of GDP)
2008
United States
United Kingdom
Australia
Malaysia
Japan
28.20%
39.00%
30.50%
15.50%
27.40%
Philippines
15.40%
Source: Wikipedia; Department of Finance

CHINA: Yes

USA:

Philippines: None for ave. LGU
Yes
Philippine National Government Main Expenditure Items (2007)
Expenditure Item
P000
Amount
% to
Total
Total Expenditure
1,023,071,1 100.00
78.80
%
Regions 1-13, CAR and ARMM
198,319,77
0.23
19.38%
Central Head Offices and NCR
282,262,10
4.37
27.59%
Source: Philippine Commission on Audit 2007 Financial Reports
LGU Income Breakdown Per LGU Component
Local Government
Units
IRA
% to Total Local Taxes % to Total
Local Taxes
IRA
and Income
&
Income
TOTAL
Local
Provinces
Government
Units
Cities
Municipalities
TOTAL
146,591,94
8.40
82,349,413
.05
43,011,998
8,963,717.
.49
Subsidies 29.34% 84
10.88%
% to
From
% to Total TOTAL
Total
55,972,204
Subsidies
Total
29.36% .00
67.97%
LGUs etc
From
INCOME Income
NGAs, 17,453,490
60,536,344
LGUs etc.92
.81
41.30%
21.19%
43,043,605
NGAs,
.14
Source: Figures are from the Philippine Commission on Audit 2007
5,701,210
234,642,57
Financial Reports and BIR website
.13
1.58
Philippine LGU Total Income vs Central Govt. Expenditure per Region
Local
Government Total* Central Central
P000
Govern Gover
Income ment nment
Expend Expen
iture diture
% to
LG
Total
*Inclusive of IRA
Source: Figures are from the Philippine Commission on Audit
2007 Financial Reports

The official function/mandate of the RDCs
is mainly coordination on PLAN and POLICY
formulation, implementation, monitoring and
evaluation.

Its membership is 75% from government
sector which includes, elected officials like
Governor, Mayor, etc. and regional line
agencies like the DPWH, DOH, etc.
25% is private sector which includes NGOs,
POs, and other private sectors.









1. Directly Supervise BIR Agencies in area
2. Directly Retain Rev. Collections w/in IRA
3. Strictly Enforce People’s Participation and
“bottom-up” Planning of LGC
4. Enforce E-Comm Law having all LGUs
display in LGU websites: budgets / expens
5. Directly Supervise all PNP units
6. Ensure Prep of Land Use, Sus Dev. Plans
7. Directly Supervise Reg. Line Agencies

The realization of local autonomy shall be
facilitated through improved coordination of
national government policies and programs
and extension of adequate technical and
material assistance to less developed and
deserving local government units;
IRA per Region vs BIR Regional Collection (in P000,000)
Regions
IRA
BIR
Collecti
on
Per
Region
146,591. 717,233
95
.58
Grand Total
Source: Figures are from the Philippine Commission on Audit 2007
Financial Reports and BIR website
National Capital
622,234
Income Surplus/Deficit Analysis Based on Regional GDP
Regions
P000
Cordillera Autonomous Region
Region 1- Ilocos Region
Region 2- Cagayan Valley
Region 3- Central Luzon
Region 4- Southern Tagalog
Region 5- Bicol Region
Region 6- Western Visayas
Region 7- Central Visayas
Region 8- Eastern Visayas
Region 9- Western Mindanao
Region 10- Northern Mindanao
Region 11- Southern Mindanao
Region 12- Central Mindanao
Region 13- CARAGA
Autonomous Region of Muslim Mindanao
National Capital Region
Regional
2006
GDP
146,367,337
191,964,140
137,183,781
509,778,428
912,813,888
165,509,956
416,986,439
456,014,441
151,809,580
148,924,676
239,757,810
362,446,727
161,893,250
88,023,886
51,831,596
2,314,647,929
(9% of RGDP)
Projected
Local Revenue
13,173,060
17,276,773
12,346,540
45,880,059
82,153,250
14,895,896
37,528,780
41,041,300
13,662,862
13,403,221
21,578,203
32,620,205
14,570,392
7,922,150
4,664,844
208,318,314
Central 2007
Govt Spending
Per Region
7,499,514
14,371,248
10,132,759
21,590,013
27,646,933
15,101,342
18,419,955
14,027,681
12,732,962
9,821,773
11,512,490
10,980,183
8,623,777
7,146,537
8,753,883
560,070,716
Local Govt
2007 Spending
Per Region
5,185,528
9,672,847
7,451,138
17,995,140
29,918,985
9,218,111
14,788,679
12,425,986
7,357,960
6,622,651
10,074,680
9,073,613
7,275,475
6,494,503
6,900,452
34,275,920
Total
Expenditure
Per Region
12,685,042
24,044,095
17,583,897
39,585,154
57,565,918
24,319,453
33,208,634
26,453,667
20,090,922
16,444,425
21,587,170
20,053,796
15,899,252
13,641,040
15,654,335
594,346,636
Surplus/
(Deficit)
488,019
(6,767,322)
(5,237,357)
6,294,905
24,587,332
(9,423,557)
4,320,146
14,587,633
(6,428,060)
(3,041,204)
(8,967)
12,566,410
(1,328,860)
(5,718,890)
(10,989,491)
(386,028,323)
Sources: Philip Medalla Paper and COA 2007 Figures
LOCAL GOVERNMENT CODE OF 1991
SEC. 108. Representation of Non-Governmental Organizations. - Within a period of sixty (60) days from the start of
organization of local development councils, the nongovernmental organizations shall choose from among themselves their
representatives to said councils. The local sanggunian concerned shall accredit nongovernmental organizations subject to
such criteria as may be provided by law.
SEC. 109. Functions of Local Development Councils. - (a) The provincial, city, and municipal development councils shall
exercise the following functions:
(1) Formulate long-term, medium-term, and annual socioeconomic development plans and policies;
(2) Formulate the medium-term and annual public investment programs;
(3) Appraise and prioritize socioeconomic development programs and projects;
(4) Formulate local investment incentives to promote the inflow and direction of private investment capital;
(5) Coordinate, monitor, and evaluate the implementation of development programs and projects; and
(6) Perform such other functions as may be provided by law or competent authority.
(b) The barangay development council shall exercise the following functions:
(1) Mobilize people's participation in local development efforts;
(2) Prepare barangay development plans based on local requirements;
(3) Monitor and evaluate the implementation of national or local programs and projects; and
(4) Perform such other functions as may be provided by law or competent authority.


Citizens directly allocating a portion of their
taxes
DEVOLVING REVENUES TO LOCAL UNITS
RIGHT TO CREATE NEW TAXES