21 Public Finance

Introduction

P ublic finance refers to the income and expense of the government in the pursuit
of national objectives. It involves the inflow of financial resources in the form of taxes
and other revenues, and the outflow of such resources in the form of expenditure to
finance goods and services.
In the Philippines, the process of public finance generally evolved in five
cycles. Primarily, it begins with the (1) formulation of fiscal and monetary policy. The
fiscal policy refers to policies on taxation and other revenue, expenditure, and
borrowings that are intended to promote the stabilization and development of the
economy. On the other hand, monetary policy is generally understood to be that which
influences the level of money supply in the economy. The crafting of both fiscal and
monetary policy is in accordance with the structural adjustment programs (SAPs)
negotiated by the International Monetary Fund (IMF).
Following the cycle is the (2) generation of revenue from taxation and other
sources. Revenue refer to all cash inflows of the national government (NG) treasury
which are collected to support government expenditures but do not increase the
liability of the NG. On the other hand, a tax which is considered the main source of the
national budget 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.
When the fiscal policy and collection has been done, the (3) expenditure of
funds through the national budget follows. Expenditure of funds shall be in accordance
with the budgetary procedures which include preparation and presentation,
authorization, execution and operation, and budget accountability. This phase covers
the estimation, determination and translation of government revenues, priorities and
activities. Government entities prepare their budgets for the year to be submitted to
the Department of Budget and Management (DBM) for review. The DBM then
consolidates all budgets to form a government wide budgeting estimate, the “National
Budget”. This shall be submitted to the president for final approval.
The 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 is considered as (4) public
borrowings. 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.
The 5th cycle of public finance is accountability. As defined, accountability is
a condition in which individuals who exercise power are constrained by external
means and by internal norms. It refers to the institution of checks and balances in an
 PUBLIC FINANCE

organization thru which an administrator accounts for his stewardship of resources or

authority.

21.1 The Philippine Budget Process

The budget process consists of four phases, namely budget preparation (or
formulation), budget legislation (or authorization), budget execution (or
implementation) and budget accountability. These phases form a budget cycle which
traces the evolution of the budget and leads to an evaluation of budget
implementation. The last phase should serve as inputs for budget authorities, fiscal
managers and Congress in their decisions regarding the budget for the succeeding
year.
The Constitution provides that national budget be prepared annually covering
a calendar year. This implies that at any given period of the year, different budget
phases for different annual budgets overlap. For example, as of June 2009, the 2009
budget is in its budget execution phase while at the same time, the 2010 budget is in
its budget preparation phase. Further, the 2008 budget is in its budget accountability
phase during this time.
The process of allocating public funds involves the decisions of different
fiscal decision-makers at the various levels of government. Setting the overall
allocation of national government expenditures across programs and projects of
departments requires the enactment of an appropriation which would have to be
approved by Congress and the President. Once an appropriation law is in place,
budget authorities from the Department of Budget Management (DBM) and head of
agencies exercise fiscal powers which determine where public funds and by how
much are actually utilized. The intricate web of decision-making processes can be
better understood using the framework of the budget process to have a working
knowledge of how all these impact on the determination of allocation of national
government resources operates.

21.2 The National Budget

The national budget is a financial plan of government or the translation of
government’s programs in monetary terms. The annual budget contains the
expenditures program which enumerates the different expenditure items and the
respective amounts intended to be spent for each. These expenditures are supposed
to achieve public purposes and be consistent with development objectives. The
expenditure program, however, is just one dimension of the budget. Public
expenditures are prepared and implemented with due consideration to the financial
resources available to government to fund its expenditures. Thus, revenue and
financing (borrowing) programs are drawn-up, along with the expenditure program,
and form part of the budget.
In 2010, President Aquino submitted to the Congress a total of PhP1.54
trillion of national budget for economic reforms, infrastructure, food security, job
creation and accessibility of education. However, the country fall short recording a
budget deficit of PhP314.46 billion, a 5.3 percent increase over last year’s PhP298.53
NSO PHILIPPINE YEARBOOK

budget deficit. This translates to a higher spending amounting to PhP1.52 trillion

compared to PhP1.21 trillion revenues generated in 2010. Though the revenue
collection has increased by 7.5 percent in 2010, the expenditure likewise incurred a
7.1 percent increase. (Refer to Table 21.1). The deficit will be financed through
borrowings from domestic and foreign sources.
The taxes collected by the Bureau of Internal Revenue (BIR), Bureau of
Customs (BOC), and other offices comprised 90.5 percent of the total revenues
recorded in 2010 in the amount of PhP1.21 trillion. The remaining came from non-tax
revenues and grants with 9.4 percent and 0.03 percent, respectively. On the other
hand, the combined expenditure from the interest payments of loans and the allotment
to Local Government Units (LGUs) incurred a total of PhP573.80 billion representing
37.7 percent of the total expenditures for 2010 (PhP1.52 trillion). (Refer to Table
21.1a.)

The Revenue Program

Deficit spending was adopted by the government in order to meet the needs
of the different sectors of the economy. Based on the past revenue collections, an
appropriate level of revenues was set, and necessary borrowings were scheduled to
compensate the expected budget deficit.
Total revenue collection in 2010 registered an increase of PhP84.72 billion or
7.5 percent higher than PhP1.12 trillion collections in 2009. The sources of these
revenues came from tax collections amounting to PhP1.09 trillion, and non-tax
sources and grants combined at PhP114.28 billion. The high revenue collection was
primarily shared in by taxes on net income and profits (PhP489.22 billion); taxes on
domestic goods and services (PhP285 billion); and taxes on international trade
transactions (PhP259.30 billion).
Tax revenues on international trade transactions sharply increased by 17.4
percent from a negative 15.4 percent in 2009. Similarly, taxes on net income profits
posted a 12.4 percent increase from a decrease of 9.7 percent. Taxes on goods and
services on the other hand, manifested a 5.0 percent increase, though 6.9 percentage
points lower than the increase the previous year. (See Table 21.3 for details).

The Expenditure Program

The expenditure program is the portion of the national budget that refers to
the current operating expenditures and capital outlays necessary for the operation of
the programs, projects and activities of the various government departments and
agencies.
The executive department prepares the government expenditure program for
the budget requirements of the various sectors of the economy. This budget
framework is designed to meet numerous institutional and structural reforms to
strengthen and improve the delivery of basic services.
The national government expenditure obligations in 2010 had amounted to
PhP1.47 trillion, 2.7 percent higher than PhP1.43 trillion set in 2009. Social services
took the biggest chunk of about PhP415.84 billion (28.2%) followed by economic
services, PhP381.27 billion (25.9%); Debt service fund, PhP294.24 billion (20.0%);
General public services, PhP280.82 billion (19.1%); and Defense, PhP91.55 billion
 PUBLIC FINANCE

(6.2%). The least amount of PhP9.26 billion or 0.6 percent was set aside for net
lending. (See Table 21.4 for details).

Economic services. In 2010, budget appropriation for this sector was PhP381.27
billion, posting a negative growth of 5.3 percent over that allocated in 2009
(PhP402.50 billion). Sub-sectors under this category were apportioned with as follows:
PhP100.59 billion for agriculture, agrarian reform, and natural resources; PhP5.58
billion for trade and industry; PhP1.69 billion for tourism; PhP2.44 billion for power and
energy; PhP18.46 billion for water resources, development and flood control;
PhP146.43 billion for communication, roads and other transportation; PhP13.05 billion
for other economic services; and PhP93.03 billion for subsidy to LGU’s. (See Table
21.4 for details).

Social services. The biggest share of about 28.2 percent was set aside for this
sector in 2010 aggregating to PhP415.84 billion. Of these expenditure, PhP225.14
billion (54.1%) was allotted to education, culture and manpower development;
PhP98.35 billion (23.7%) for subsidy to LGU’s; PhP48.75 billion (11.7%) for social
security, welfare and employment; PhP31 billion (7.5%) for health; PhP7.15 billion
(1.7%) for housing and community development; PhP4.03 billion (1.0%) for land
distribution; and, PhP1.44 billion (0.3%) for other social services. (See Table 21.4 for
details).

Defense. The amount set aside for this sector amounted to PhP91.54 billion, a
notable increase of 45.4 percent from PhP62.97 in 2009. This represents 6.2 percent
of the total government expenditures. This amount was used for domestic security and
other defense services. (See Table 21.4.)

General Public Services. The PhP280.82 billion assigned for this sector in 2010 was
allocated for the public order and safety, PhP107.05 billion (38.1%); general
administration, PhP88.94 billion (31.7%); subsidy to LGUs, PhP74.43 billion (26.5%);
and other general public services, PhP10.40 billion (3.7%). (See Table 21.4 for
details).

21.3 Local Government Finance

In 2009, the beginning cash balance of the local government unit was at
PhP98.54 billion with additional receipts from revenues and borrowings which
amounted to PhP298.60 billion. These translate to an aggregate financial resources of
PhP397.14 billion, a 23.6 percent increase from PhP321.42 billion last year. Total
expenditures, on the other hand, totalled PhP246.99 billion resulting to a positive
ending balance of PhP150.16 billion. (Table 21.5 presents the consolidated statement
of receipts and expenditures of local government units.)

Receipts. Combined receipts from taxes (PhP251.46 billion), non-taxes revenues,

(PhP45.56 billion) and borrowings (PhP1.58 billion) comprised 75.2 percent of the
total financial resources (PhP397.14 billion) of local government units for the year.
NSO PHILIPPINE YEARBOOK

Tax revenues in 2009 that amounted to PhP251.46 billion comprised 63.3

percent of the total financial resources of local government units. Of the amount
reported, internal revenue allotment (IRA) shared the biggest portion of PhP189.96
billion or 75.5 percent to total tax collections, followed by local taxes with PhP35.62
billion or 14.2 percent, and real property taxes with PhP25.88 billion or 10.3 percent.
(See Table 21.5).
Non-tax revenues, meanwhile, made up 11.5 percent of the total financial
resources in 2009, with operating and miscellaneous revenue as the major
component, amounting to PhP19.53 billion or 42.9 percent of total non-tax revenues.
Other receipts contributed 32 percent, while grants had 20.2 percent of the total. The
rests or 4.9 percent were contributed by capital revenue, interfund transfer, and
extraordinary income. (See Table 21.5).

Total Financial Resources. LGUs were able to produce total financial resources of
PhP397.14 billion enough to finance its expenditures in 2009. Total receipts of
PhP298.60 billion and cash balance of PhP98.54 billion at the beginning of the year,
constituted the financial resources of LGUs. In addition to this fund, local borrowings
reached to PhP1.59 billion. (See Table 21.5)

Expenditures. In continuing economic and social development projects and

programs, the LGUs incurred a total expenditure of PhP246.99 billion in 2009. The
level of spending had increased to about 10.8 percent from PhP222.88 billion in 2008.

Ending Cash balance. With total financial resources valued at PhP397.14 billion and
total expenditures of PhP246.99 billion in 2009, LGUs expected a cash balance of
PhP150.16 billion at the end of the year. (See Table 21.5.)

21.4 The Status of Public Debt

In 2010, consolidated public sector outstanding debt totaled PhP4.72 trillion,
7.3 percent or PhP321.6 billion higher than PhP4.40 trillion recorded in 2009. Of the
amount, domestic debts reached PhP2.72 trillion exhibiting an increase of about 10
percent from last year’s PhP2.47 trillion. A 3.8 percent increase was also observed in
foreign debts recording a total of PhP2 trillion from PhP1.93 trillion last year. (See
Table 21.6)
Direct loans availed by agencies and government securities constitute almost
the entire domestic debt with a total of PhP2.72 trillion. On the other hand, national
securitized loans (PhP1.17 trillion) took the biggest slice, 58.6 percent of the total
foreign debt, and the remaining 41.4 percent went to national government loans
(PhP828.66 billion). (See Table 21.7)
Public debts are obligations incurred by the government and all its branches,
agencies, and instruments, including government monetary institutions. They consist
of all claims against the government that may be payable in goods and services but
usually paid in cash to foreign governments or individuals, or to persons, natural or
juridical.
Obligations may be purely financial, that is, loans or advances extended to
the Philippine government, its branches, agencies, and instruments. They may also be
 PUBLIC FINANCE

services rendered or goods delivered to the government, for which certificates, notes,
or other proofs of indebtedness have been issued to the creditor. For external debts,
such as claims of foreign entities, obligations may be securities held in trust,
nonbonded debts, and obligations of the Philippine government to the International
Monetary Fund (IMF).
The Philippines, though excluded from the IMF's list of “poor” countries,
remains as one of the developing countries in deep debt. In this regard, the
government continues to restructure national debt, pursue a debt reduction program,
and find other creative approaches to solve the debt problem. As an effect, the budget
for debt service payment has increased remarkably since restructuring began.

21.5 Sources of Revenue

The Bureau of Internal Revenue (BIR) has the power and duty to
comprehend the assessment and collection of all national internal revenue taxes,
fees, and charges, and the enforcement of all forfeitures, penalties, and fines
connected therewith. The Bureau of Customs (BOC) and the Land Transportation
Office (LTO) are constituted agents of the BIR. The BOC is empowered to collect
advanced sales or compensating taxes on imported articles, while the LTO collects
taxes on private motor vehicles.
The BIR in 2009 collected a total of PhP722.76 billion, roughly decreasing by
PhP23.51 billion or 3.2 percent lower compared to PhP746.27 billion collected in
2008. Of this amount, PhP435.37 billion (60.2%) came from taxes on net income and
profit, PhP168.29 billion (23.3%) from value-added tax, PhP60.55 billion (8.4%) from
excise tax, PhP43.24 billion (6%) from other taxes, and PhP42.84 (5.9%) from
percentage tax. Non-BIR operations such as taxes on treasury bills/government
securities and travel tax shared PhP27.53 billion or 3.7 percent of the total tax
collection (PhP750.29 billion). (Refer to Table 21.8)
The BOC, on the other hand, posted cash collection of PhP242.84 billion in
2009 which showed 9.7 percent increase from PhP221.31 billion collected in 2008.
Import tax has PhP161.24 billion or 66.4 percent share while import duties generated
the remaining PhP81.60 billion or 33.6 percent. (Refer to Table 21.9)

21.6 Taxation and the Tax System

Taxation is the exercise of the sovereign state power to raise revenue for the
expenses of the government. It is a medium by which a desirable income distribution
pattern is attained, economic growth is promoted, and longer-running institutional
changes are effected to meet social and political goals.
Tax administration is a system involving the assessment, collection, and
enforcement of taxes. It structures and determines the tax liability of a taxpayer.
A tax is a compulsory contribution mandated by law and exacted by the
government for a public purpose.
It is important to understand and distinguish the various types of taxes. Tax
imposed by the national government is called national tax, and tax laid directly upon
persons and property is called excise tax, which is neither called poll tax nor property
NSO PHILIPPINE YEARBOOK

tax. Tax demanded from a person, upon whom the law intends to impose it and one
that cannot be shifted by the taxpayer to some other person, is called direct tax. Tax
levied for general purposes of the government is popularly known as general tax.

Philippine Tax Laws

The first income tax law in the Philippines was the United States (US)
Revenue Act of 1913. A section of the Act provided that the administration and
enforcement of said law will be under the internal revenue officers of the Philippine
government. This law was amended by the Act of the US Congress in 1916 and by
the US War Revenue Act of 1917. The latter Act authorized the Philippine legislature
to amend, modify, or repeal the Federal Income Tax Law then enforced in the
Philippines. On March 9, 1919, the Philippine legislature enacted Act 2833 that was
the country’s first income tax law passed through legislation.
On June 15, 1939, Commonwealth Act 466, also known as the National
Internal Revenue Code (NIRC), was approved, with Title II thereof as the Income Tax
Law. The NIRC took effect on July 1, 1939 but the provisions on income tax were
applied retroactively on January 1, 1939.
The Income Tax Law of 1939 was amended by numerous laws and by
several presidential decrees but was consolidated into a single tax code known as the
NIRC of 1977 by Presidential Decree (PD) 1158 on June 3 that year. In October 1985,
PD 1994, after amending some provisions embodied in the NIRC of 1977, created the
new NIRC of 1986. In 1997, RA 8424 revised the NIRC with tax reforms to promote
sustainable economic growth through a rationalized internal revenue tax system and
tax administration. With the amended code, government hopes to bring equitable relief
to a greater number of taxpayers in order to improve levels of disposable income and
increase economic activity.

The Income Tax

Income tax is a tax on a person’s income, emoluments, profits arising from
property, practice of profession, conduct of trade or business, or on the pertinent items
of gross income specified in the Tax Code of 1997 as amended, less the deduction
and/or personal and additional exemptions if any, authorized for such types of income,
by the Tax Code, as amended or other special laws.

Coverage of individual income tax. A tax is imposed upon the income of every
individual citizen both residing within and outside the country, including overseas
contract workers. Under Philippine law, the same income tax rates apply for individual
aliens having resident status. Income taxes shall be computed according to the rates
appearing on Table 21.10.
However, slightly different rates apply to certain passive income such as
interests, royalties, prizes, and other winnings of Filipino residents. Any amount of
interest from a currency bank deposit and yield or any other monetary benefit from
deposit substitutes, trust funds, and similar arrangements, is taxed a flat rate of 10
percent. Royalties except on books as well as other literary works and musical
compositions shall be imposed a final tax of 10 percent. Prizes beyond PhP10,000
 PUBLIC FINANCE

and winnings except from Philippine Charity Sweepstakes and lotto are subjected to a
tax rate of 20 percent.
Nonresident aliens engaged in trade or business in the Philippines shall be
subject to an income tax in the same manner as individual citizens and resident alien
individuals are taxed. Nonresident individuals are those who come to the Philippines
and stay herein for an aggregate period of more than 180 days. Every nonresident
alien individual not engaged in trade or business in the Philippines are taxed .25
percent of all their income including deposit interests, property dividends, profits, and
the like. A lower tax rate of 15 percent on gross income is imposed upon alien
individuals employed by multinational companies, offshore banking units, or petroleum
service contractors.
Taxable compensation income is gross compensation income less the
personal and additional exemptions allowed. The term “gross compensation income”
includes salaries, wages, honoraria, bonuses, all kinds of allowances, fringe benefits,
fees, pensions, and other similar income. It covers all remuneration for services
whether paid in cash or in kind rendered by an employee for his or her employer.
On the other hand, an individual who earns from the practice of his or her
profession, trade, or business is taxed following the schedule on taxable net income.
The modified gross income tax scheme weeds out unnecessary deductions for fixed
income earners who are entitled only to personal and additional exemptions and, in
the case of business or professional income, limits entertainment, travel, and
promotional expenses allowed as deductions.

Exemptions in the individual income tax. The exemptions granted under the
income tax laws applicable for income earned for the taxable year are as follows:
single, widow or widower, or married individual, legally separated with no qualified
dependent (PhP50,000); head of the family (PhP50,000); and employed married
individual (PhP50,000).
The head of the family is an unmarried or legally separated man or woman,
with one or both parents, or with one or more siblings, or with one or more legitimate,
recognized as natural or legally adopted children living with and dependent upon him
or her for their chief support. It applies to cases where such brothers, sisters, or
children are not older than 21 years, unmarried, and not gainfully employed; or where
such siblings, or children, regardless of age, are incapable of self-support due to
mental or physical disability. The term also includes any benefactor of a senior citizen
under Republic Act 7432.
For each of the qualified dependents (whose number should not exceed
four), an additional exemption of PhP25,000 is granted. The husband shall be the
proper claimant of the exemption in respect to any dependent children, unless he
explicitly waives this right in favor of his wife in the withholding exemption certificate.
A nonresident alien is entitled to personal exemption in an amount allowed
by the income tax laws of the country where he or she is a subject or citizen, and
provided further that the individual files a true and accurate return of his or her income
from all sources in the Philippines. The exemption, however, should not exceed the
amount fixed for citizens or Philippine residents under the Tax Code.
NSO PHILIPPINE YEARBOOK

Tax on Corporations
Generally, domestic corporations have to pay a 30-percent tax on their
taxable income. In special cases, however, the President, upon the recommendation
of the Secretary of Finance, allows corporations the option to be taxed at 15 percent
of gross income provided that certain conditions have been satisfied. Specially
reduced rates apply to duly accredited private schools and hospitals, which are taxed
by 10 percent on their taxable income.
Resident foreign corporations follow the same tax rate of 32 percent of their
taxable income. Just like domestic institutions, they can also opt for settling for a 15-
percent tax rate on their gross income following Revenue Code conditions.
International carriers and international shipping companies doing business in the
Philippines shall pay a tax of two and one-half percent on its gross Philippine billings.
Income derived by offshore banking units authorized by the Bangko Sentral
ng Pilipinas to transact business with other offshore banking units, including any
interest income derived from foreign currency loans granted to residents, shall be
subject to a final income tax at the rate of 10 percent.
Unless otherwise provided, nonresident foreign corporations shall pay a tax
equal to 35 percent of the gross income received during each taxable year from all
sources within the Philippines, such as interests, dividends, rents, royalties, salaries,
premiums, annuities, emoluments, and the like. Meanwhile, a cinematographic film
owner, lessor, or distributor shall pay a tax of 25 percent of his/her gross income from
all sources within the Philippines. A nonresident owner or lessor of vessels shall be
subject to a tax of 4.5 percent of gross rentals, lease or charter fees from leases or
charters to Filipino citizens. Rentals, charters, and other fees derived by a nonresident
lessor of aircraft, machinery, and other equipment shall be subject to a tax of 7.5
percent of gross rentals or fees.

Transfer Taxes
Transfer taxes are exacted after any transfer of property. These come in two
forms: the estate tax and the donor's tax.

Estate tax. This is imposed on the transfer of the decedent’s estate to lawful heirs and
beneficiaries and is based on the fair market value of the net estate at the time of the
decedent’s death. The net estate value is arrived at by deducting from the total fair
market value of the decedent’s gross estate the sum of allowable deductions.
The executor or administrator of the estate or, in default thereof shall file the
estate tax return, by any person in actual or constructive possession of the property at
the time of the decedent's death. The return shall be filed within six months from the
decedent’s death. However, the Commissioner may in meritorious cases, grant
extension not exceeding 30 days. If judicial proceeding has been instituted within such
period, the return can be filed within 2 years after the decedent’s death.

Donor's tax. This is imposed on the transfer of property as a gift. The tax payable by
the donor is based upon the fair market value of the total net gifts made by such donor
during the calendar year.
 PUBLIC FINANCE

The return shall be filed with any authorized agent bank (AAB) of the RDO
having jurisdiction over the place of the domicile of the donor at the time of the
transfer. In places where there are no AAB, the return will be filed directly with the
Revenue Collection Officer or duly authorized City or Municipal Treasurer, in which
the donor was domiciled at the time of the transfer, within 30 days after donation was
made.
In case of gift made by a non-resident alien, the return may be filed with
Revenue District Number 39 South Quezon City or with Philippine Embassy or
consulate in the country where donor is domiciled at the time of the transfer.

Excise Taxes
Excise taxes apply to goods manufactured or produced in the Philippines for
domestic sale or consumption, as well as to things imported, but not to domestic
products actually exported without returning to the Philippines. Excise taxes on
imported products shall be imposed in addition to customs duties.
An excise tax imposed and based on the weight or volume capacity and
other physical unit of measure is called specific tax, and an excise tax imposed and
based on the selling price or other specified value of the article is called ad valorem
tax. Specific tax is one that applies to both local and imported articles, and is not a tax
on property.
The manufacturer or producer pays excise taxes on domestic products
before removal from the place of production. Excise taxes on locally manufactured
petroleum, however, shall be paid within 15 days from the date of removal thereof
from the place of production.
The owner or importer shall pay excise taxes on imported articles to the
customs officer before the release of such articles from the customhouse. Imported
articles shall be subject to the same rates and bases of excise taxes applicable to
locally manufactured articles. Articles subject to specific taxes are as follows:

Alcohol products. On distilled spirits, a tax of PhP11.65 per proof liter is imposed
when the beverages are produced from the sap of nipa, coconut, cassava, camote, or
buri palm, or from the juice or syrup, of sugar cane, and provided such materials are
produced commercially in the country where they are processed into liquor.
If produced from raw materials other than those enumerated in the foregoing
paragraph, the tax shall be in accordance with the net retail price per bottle of 750-
milliliter volume capacity (excluding the excise tax and the value added tax).
For bottles retailing for less than PhP250 per proof liter, a tax of PhP126 is
imposed. For bottles selling for PhP250 up to PhP675 per proof liter, a tax of PhP252
is also imposed. The tax is doubled (PhP504) when the spirit costs more than PhP675
per proof liter. Medicinal preparations, flavoring extracts, and all other related
preparations except toilet preparations, of which, excluding water, distilled spirits form
the chief ingredients, shall be subject to the same tax as the chief ingredient.
Likewise, the excise taxes that will be levied on fermented liquor, such as
beer, lager, ale, porter, and the like, except tuba, basi, and other similar fermented
local liquor shall vary depending on the liquor's net retail price per liter. For example, a
liter of liquor with a net retail price of PhP14.50 up to PhP22.00, shall have a
corresponding tax of PhP12.30.
NSO PHILIPPINE YEARBOOK

On wines, a tax of PhP145.60 per liter of volume capacity shall be collected

on sparkling wines worth PhP500 or less, regardless of proof. Sparkling wines
exceeding PhP500 shall be taxed with PhP436.80. Still and fortified wines are taxed at
varying amount depending on the percentage of alcohol used.

Tobacco products. A one peso tax shall be collected for each kilogram of the
following tobacco products: tobacco twisted by hand or reduced into a condition to be
consumed in any manner other than the usual mode of drying and curing; tobacco
prepared with or without the use of machine or instruments or without being pressed
or sweetened; and fine-cut shorts and refuse, scrap, cuttings, and stems of tobacco.
On tobacco specially prepared for chewing a tax of 79 centavos is collected on each
kilogram.

Cigars and cigarettes. There shall be levied, assessed, and collected on cigars an
ad valorem tax based on the net retail price per cigar (excluding the excise tax and
value-added tax). If the net retail price per cigar is PhP500 or less, ten percent. If the
net retail price per cigar (excluding the excise and value added tax) is more than
PhP500.00, PhP50.00 plus 15 percent of the net retail price in excess of the
PhP500.00
Cigarettes packed by hand shall be levied, assessed, and collected PhP2.47
per pack effective January 1, 2009, PhP2.72 per pack effective January 1, 2011.
Cigarettes packed by machine, if net retail price (excluding the excise tax and value
added tax) is below five pesos, effective January 1, 2009, PhP2.72 per pack, effective
January 1, 2011, PhP2.72 per pack; if net retail price (excluding excise tax and value
added tax) above PhP10.00 per pack, PhP27.16 per pack (effective January 1, 2009)
and PhP28.30 per pack (effective January 1, 2011).

Tobacco inspection fees. There shall be collected a fee of 50 centavos for every
thousand cigars or fraction thereof; 10 centavos for every thousand cigarettes or
fraction thereof; two centavos for each kilogram of leaf tobacco or fraction thereof; and
three centavos for each kilogram or fraction thereof of scrap and tobacco products.
The inspection fee on leaf tobacco scrap, cigars, cigarettes, or other tobacco
products shall be paid by the wholesaler, manufacturer, producer, or owner
immediately before removing such goods from the establishment of the wholesaler or
manufacturer of redrying plant. In the case of imported leaf tobacco and products
thereof, the importer shall pay the inspection fee before taking them from the Bureau
of Customs' custody.

Petroleum products. A specific tax shall be collected on refined and manufactured

mineral oils, and on other motor fuels, as follows: PhP4.50 per liter of volume capacity
of lubricating oils; five centavos per liter of volume capacity of processed gas;
PhP3.50 per kilogram of greases, waxes, and petroleum; and, five centavos per liter
of volume capacity of denatured alcohol to be used for motive power.
A tax shall be collected on refined and manufactured mineral oils and motor
fuels based on the company take or netback on the product as approved by the
Energy Regulatory Board. Naphtha, regular gasoline, and other similar products of
distillation, and aviation turbo jet fuel has to be taxed PhP4.80 per liter of volume
capacity. Leaded premium gasoline per liter of volume capacity carries a
 PUBLIC FINANCE

corresponding tax of PhP5.35. Unleaded premium gasoline per liter of volume

capacity has a tax equivalent of PhP4.35. Lower taxes apply to aviation turbo jet fuel,
which is taxed PhP3.67 per liter of volume capacity; diesel fuel oil, PhP1.63 per liter;
and kerosene, 60 centavos per liter.

Miscellaneous products. Taxes are also imposed on the following:

1. NONESSENTIAL GOODS. Authentic or costume jewelry, perfumes, and toilet water,

and yachts or vessels intended for pleasure commute or sports are subject to a
tax equivalent to 20 percent based on the wholesale price or the value of
importation used by the BOC in determining tariff and customs duties.

2. AUTOMOBILES. There shall be levied, assessed, and collected an ad valorem tax

on automobiles based on the manufacturers or importer’s selling price, net of
excise and value-added tax in accordance with the following schedule:

Engine Displacement

Engine Displacement Tax Rate

Gasoline Diesel (Percent)

PhP1,600 and below PhP1,800 and below 15

PhP1,601 - PhP2,000 PhP1,801 – PhP2,300 35
PhP2,101 - PhP2,700 PhP2,301 - PhP3,000 50
PhP2,701 and over PhP3,001 and over 100

Mineral products. Levied on mineral, mineral products, and quarry resources are the
following excise taxes: PhP10 per metric ton of coal and coke and two-percent tax on
all nonmetallic minerals and quarry resources based on the actual market value of the
gross output thereof at the time of removal in the case of locally extracted or
produced; or the value used by the Bureau of Customs in determining tariff and
customs duties, net of excise tax and value added tax, in the case of importation. For
metallic minerals (the same condition as for nonmetallic) a two-percent tax is charged
for gold and chromite while copper and other metallic minerals are taxed below two
percent of their value, and a three-percent tax in the case of indigenous petroleum
based on its fair international market value.

Percentage Tax Payment

A percentage tax is a business tax imposed on persons or entities who sell or
lease goods, properties or services in the course of trade or business where gross
annual sales or receipts do not exceed PhP750,000 and who are not VAT-registered.
NSO PHILIPPINE YEARBOOK

Other Percentage Taxes

Percentage taxes of varying rates are imposed as follows:

Taxes on finance companies. A tax of five percent is imposed on interests,

discounts, and other items of gross income paid to finance companies and other
financial intermediaries not performing quasi-banking functions.
Interest, commissions and discounts paid from loan transactions from
financial companies as well as income from financial leasing shall be taxed based on
remaining maturities: Short term maturity (not over 2 years – 5%); Medium term (over
2 years but not over 4 years – 3%); Long term maturity (over 4 years but not over 7
years – 1%, over 7 years – 0%).

Taxes on banks and nonbank financial intermediaries. A tax is imposed on banks

and nonbank financial intermediaries with this schedule:
On interests, commissions, and discounts from lending activities, as well as
income from financial leasing on the basis of remaining maturities of instruments from
which such receipts are derived:

1. Five percent for short-term maturity not in excess of two years

2. Three percent for medium-term maturity for over two years but not to exceed
four years
3. One percent for long-term maturity of over four years up to seven years
4. Five percent on royalties, rentals of property (real or personal), profits from
exchange, and all other items.

Taxes on insurance premiums. A tax of five percent is imposed on total premiums

collected from life insurance, companies (except purely cooperative companies or
associations).

Taxes on franchises. All franchises on radio and television broadcasting companies

whose annual gross receipts of the preceding year does not exceed PhP10 million are
taxed by three percent. For electric, gas, and water utilities, a tax of two percent on
the gross receipts is derived from the business granting the franchise.

Amusement taxes. A tax of 18 percent is collected on gross receipts of operators or

proprietors of cockpits, cabarets, and night or day clubs; 10 percent on gross receipts
of boxing exhibitions; 15 percent on gross receipts of professional basketball games,
and bowling alleys; and, 30 percent on gross receipts of operators of race tracks.
Amusement taxes are payable within 20 days after the end of each quarter.

Taxes on winnings. Every person who wins in horse races shall pay a tax equivalent
to 30 percent of his or her winnings or individual dividends after the cost of the ticket
has been deducted. The same tax shall be collected from owners of winning
racehorses.

Taxes on sale, barter or exchange of stock shares. On every sale, barter,

exchange, or disposition of stock shares listed and traded through the local stock
 PUBLIC FINANCE

exchange other than the sale by a securities dealer, a tax of one half of one percent
on the gross selling price or gross value in money of shares of stocks sold, bartered,
exchanged or otherwise dispose is collected.

Common carrier's tax. Domestic carriers and keepers of garages are collected three
percent of their gross receipts.
International air/shipping carriers doing business in the Philippines, a three
percent tax on gross receipts is imposed.

Overseas communication tax. A tax of 10 percent is imposed on every overseas

dispatch, message, or conversation transmitted from the Philippines by telephone,
telegraph, telewriter exchange, wireless, and other communication equipment
services on the amount paid for such services. The tax is payable within 20 days after
the end of each quarter.
This tax, however, does not apply to amounts paid for messages transmitted
by the government of the Philippines or any of its political subdivisions; any embassy
and consular office of a foreign government; and a public international organization
based in the country. It is also inapplicable in amounts paid for messages by any
newspaper, press association, radio or television, and the like, in which messages
exclusively concern news gathering.

Documentary Stamp Taxes

Documentary stamp tax is a tax on documents, instruments, loan
agreements and papers evidencing the acceptance, assignment, sale or transfer of
obligation, right or property incidents thereto.

Taxes Imposed Under Special Laws

Taxes imposed and collected by the government under special laws are the
following:

Residence tax. A tax is exacted on every country resident of 18 years of age and
over, who is described as follows:

1. Has been regularly employed on a wage and salary basis for at least 30
consecutive working days during any calendar year at the rate of not less than
PhP1 a day;
2. Engaged in business or occupation;
3. Owns real property with an aggregate assessed value of PhP1,000 or more; and,
4. Required by law to file an income tax return. The above-described individual shall
pay an annual residence tax of PhP1 and an annual additional tax not exceeding
PhP3,000 in accordance with the following schedule:
a. PhP2 for every PhP5,000 worth of real property in the Philippines owned by
such person during the preceding year based on the valuation used for the
NSO PHILIPPINE YEARBOOK

payment of real property tax under existing laws, and found in the
assessment rolls of the municipality or city where the property is situated;
b. PhP2 for every PhP5,000 worth of gross receipts or earnings in excess of
PhP10,000 derived by such person from his or her business in the
Philippines in the preceding year; and,
c. PhP1 for every PhP1,000 worth of salaries or gross receipts or earnings
derived by such person from the exercise of any profession in the Philippines
or from the pursuit of any occupation therein during the preceding year.

Every corporation—no matter how it was created or organized, whether

owned or managed by locals or foreigners, engaged in or doing business in the
Philippines—shall pay an annual residence tax of PhP50 and an annual additional tax
which, in no case, shall exceed PhP6,000 in accordance with the following schedule:

1. PhP2 for every PhP5,000 worth of real property in the Philippines owned by it
during the preceding year based on the valuation used for the payment of real
property under existing laws, and found in the assessment rolls of the city or
municipality where the real property is situated; and,
2. PhP2 for every gross receipt or earning derived by it from its business in the
Philippines during the preceding year. For purposes of additional tax, dividends
received by a corporation from another corporation shall not be considered part of
gross receipts or earnings of the corporation.

Narcotics tax. On or before January 20 of each year, every person who deals in any
manner with opium, marijuana, coca leaves, or any other synthetic drug, hereafter
declared habit-forming by the President of the Philippines, shall register with the BIR
his or her name and place of business, and pay the taxes required.
The fixed annual taxes on business in narcotics drugs are as follows: PhP72
on importers, manufacturers, producers, or compounders; PhP36 on wholesale
dealers; PhP12 on retail dealers; and PhP6 on physicians, dentists, veterinary
surgeons, and others lawfully entitled to obtain and use the drugs in the laboratory.

Motor vehicle fees. All motor vehicles and trailers of any type used or operated on
any highway of the Philippines must be registered with the Land Transportation Office
for the current year, the dates of registration of which shall be based on a scheme
prepared by the Office. Registration of such vehicles shall be distributed equitably
over in the calendar year, and shall not be changed more often than once every three
years but only upon due notice given to the public at least 90 calendar days before its
effectivity.

Immigration tax. Every alien over 16 years of age, admitted to the Philippines and
remain to stay exceeding 60 days, shall pay a tax of PhP25. The tax shall be paid to
the immigration officer or to his or her duly authorized representative upon entry.

Travel tax. A tax shall be collected from the following: citizens, permanent resident
aliens, nonimmigrant aliens who have stayed in the Philippines for more than one
 PUBLIC FINANCE

year, and Filipino citizens who while being permanent residents of a foreign country
have stayed in the Philippines for more than a year.
Persons traveling on nonrevenue tickets are also subject to a travel tax
based on the classification of their nonrevenue tickets. The tax rates imposed by PD
1867 are as follows: PhP2,700 for first-class passage, PhP1,620 for economy-class
passage, PhP1,080 reduced rate on first class passage, PhP810 reduced rate on
economy-class passage, and PhP300 for contract workers.
Certain classes of persons traveling abroad can be exempted from being
taxed by securing a travel tax exemption certificate issued by the Philippine Tourism
Authority.

The Value Added Tax

Any person who, in the course of trade or business, sells, barters or
exchanges goods, renders services, or engages in similar transactions, as well as one
who imports goods, shall be subject to the value added tax (VAT), if the aggregate
amount of actual gross sales or receipts exceeded PhP1,500,000.00.

Sale of goods and properties. A VAT equivalent to 12 percent of the gross selling
price or gross value in money of the goods and properties sold, bartered, or
exchanged is collected from the seller or transfer.

Sale on services and use or lease of properties. A 12 percent tax Is collected on

gross receipts derived from the sale or exchange of service, including the use or lease
of properties.

Importation of goods. There shall be collected on every importation of goods unless

otherwise specified a 12-percent VAT based on the total value used by the BOC in
determining tariffs and customs duties, plus customs duties and excise taxes, if any,
and other charges, such as tax to be paid by the importer prior to the release of such
goods from customs custody; provided, that where the customs duties are determined
on the basis of quantity and volume of the goods, the VAT shall be based on the
landed cost plus excise taxes, if any.

Sources:

21.1-21.3 Department of Budget and Management

Department of Finance
21.4-21.5 Bureau of Customs.
Bureau of Internal Revenue
NSO PHILIPPINE YEARBOOK

TABLE 21.1 Summary of Government Income and Expenditures: 1977-2010

(Million Pesos)

Year Income Percent Expen- Percent Year Income Percent Expen- Percent
Increase diture Increase Increase diture Increase
(Decrease) (Decrease (Decrease) (Decrease)

1977 22,138 21.0 22,597 6.1 1994 335,229 27.9 327,765 (3.4)
1978 30,391 37.3 27,106 20.0 1995 370,011 10.4 392,449 19.7
1979 29,470 (3.0) 32,884 21.3 1996 410,450 10.9 416,141 6.0
1980 34,731 17.9 37,404 13.7 1997 467,443 13.9 493,468 18.6
1981 35,933 3.5 48,154 28.7 1998 462,515 (1.1) 537,434 8.9

1982 38,205 6.3 48,924 1.6 1999 478,502 3.5 580,385 8.0
1983 45,632 19.4 53,418 9.2 2000 514,762 7.6 682,460 17.6
1984 56,861 24.6 59,024 10.5 2001 567,481 10.2 714,504 4.7
1985 68,961 21.3 74,958 27.0 2002 578,406 1.9 789,147 10.4
1986 79,245 14.9 114,505 52.8 2003 639,737 10.6 839,605 6.4

1987 103,214 30.2 155,500 35.8 2004 706,718 10.5 893,775 6.5
1988 112,861 9.3 168,409 8.3 2005 816,159 15.5 962,937 7.7
1989 142,136 25.9 173,341 2.9 2006 979,638 20.0 1,044,429 8.5
1990 177,216 24.7 211,756 22.2 2007 1,136,560 16.0 1,149,001 10.0
1991 206,381 16.5 254,384 20.1 2008 1,202,905 5.8 1,271,022 10.6

1992 253,138 22.7 286,603 12.7 2009 1,123,211 (6.6) 1,421,743 11.9
1993 262,202 3.6 339,359 18.4 2010 1,207,926 7.5 1,522,384 7.1

Source: Department of Budget and Management.

 PUBLIC FINANCE

Table 21.1a National Government Cash Budget: 2005-2010

(Million Pesos)

Item 2005 2006 2007 2008 2009 2010

Revenues 816,159 979,638 1,136,560 1,202,905 1,123,211 1,207,926

Tax Revenues 705,615 859,857 932,937 1,049,179 981,631 1,093,643
Bureau of Internal Revenue 542,697 652,734 713,605 778,571 750,287 822,623
Bureau of Customs 154,566 198,161 209,439 260,248 220,307 259,241
Other offices 8,352 8,962 9,893 10,360 11,037 11,779
Non-tax revenues 110,456 119,598 203,473 153,601 141,389 113,877
Grants 88 183 150 125 191 406

Expenditures 962,937 1,044,429 1,149,001 1,271,022 1,421,743 1,522,384

Allotment to LGUs 160,550 174,713 193,712 222,995 264,645 279,552
Interest payments 299,807 310,108 267,800 272,218 278,866 294,244
Subsidy 12,237 13,810 27,336 21,109 17,439 21,005
Equity 190 3,561 3,729 1,691 1,359 2,149
Net lending 1,707 131 9,750 14,393 5,064 9,258
Tax expenditures 13,319 15,577 24,984 49,717 45,231 39,693
Others 475,127 526,529 621,690 688,899 809,139 876,483

Surplus (deficit) (146,778) (64,791) (12,441) (68,117) (298,532) (314,458)

Financing 235,992 110,121 99,108 160,108 229,843 351,646

External (net) 92,665 120,754 56,162 (9,202) 152,477 133,048
External (gross) 218,317 284,081 118,414 71,311 251,366 257,357
Less: Amortization 125,652 163,327 62,252 80,513 98,889 124,309
Domestic (net) 143,327 (10,633) 42,946 169,310 77,366 218,598
Domestic (gross) 396,819 370,306 326,963 429,261 321,898 489,844
Less: Amortization 253,492 380,939 284,017 259,951 244,532 271,246

Change in cash 22,329 6,063 106,951 47,477 (66,027) 37,166

Budgetary 89,214 45,330 86,667 91,991 (68,689) 37,188
Non-budgetary (66,885) (39,267) 20,284 (44,514) 2,662 (22)

Source: Bureau of Treasury.

NSO PHILIPPINE YEARBOOK

TABLE 21.2 Fiscal Program of the National Government: 2004-2010

(Billion Pesos)

Particulars 2004 2005 2006 2007 2008 2009 2010

Revenues 706.72 816.16 979.64 1,136.56 1,202.91 1,123.21 1,207.92

Current operating expenditures 893.78 962.94 1,044.43 1,149.00 1,271.02 1,421.74 1,522.38

Surplus/Deficit (187.06) (146.78) (64.79) (12.44) (68.12) (298.53) (314.46)

Financing account 242.54 235.99 110.12 99.11 160.11 229.84 351.65

Budgetary 55.49 89.21 45.33 86.67 91.99 (68.69) 37.19
Non-Budgetary (74.90) (66.89) (39.27) (20.28) (44.51) 2.66 (0.20)

Notes : Net foreign financing refers to "net foreign borrowings."

While net domestic financing is computed as "net domestic borrowing less budgetary change in cash."

Source: Department of Budget and Management.

TABLE 21.3 National Government Revenues, by Source: 2005-2010

(Million Pesos)

Particulars 2005 2006 2007 2008 2009 2010

Total revenues 816,159 979,638 1,136,560 1,202,905 1,123,211 1,207,926

Tax revenues 705,615 859,857 932,937 1,049,179 981,631 1,093,643

Taxes on net income and profits 323,334 376,991 426,902 482,248 435,372 489,221
Taxes on property 1,017 1,112 958 1,278 1,425 1,982
Transfer taxes 1,017 1,112 958 1,278 1,425 1,982
Taxes on goods and services 183,747 237,137 241,490 242,548 271,378 284,995
General sales, turnover or value added taxes 87,465 140,934 145,029 140,318 168,296 172,208
Selective taxes on goods 61,816 58,254 55,532 61,416 60,548 67,207
Selective taxes on services 32,823 36,136 40,210 40,117 42,086 44,918
Taxes on use of goods or permissions to
perform activities and others 1,643 1,813 719 697 748 662
Taxes on international trade and transactions 154,968 198,607 210,039 260,917 220,784 259,296
Import duties and taxes 154,566 198,161 209,439 260,248 220,307 259,241
Others 402 446 600 669 477 55
Other taxes 42,549 46,010 53,548 62,188 52,372 58,149
Stamp taxes 29,431 30,289 35,107 40,054 37,484 42,703
Others 13,118 15,721 18,441 22,134 14,888 15,446

Nontax revenues 110,544 119,781 203,623 153,716 141,580 114,283

Non-tax revenue proper 108,026 113,783 112,854 122,302 139,999 112,963
Capital revenue 2,430 5,815 90,619 31,289 1,390 914
Grants 88 183 150 125 191 406

Source: Bureau of the Treasury.

 PUBLIC FINANCE

TABLE 21.4 National Government Expenditures, Obligation Basis

by Sector: 2005-2010
(Million Pesos)

Particulars 2005 2006 2007 2008 2009 2010

Total expenditures 947,554 1,052,146 1,155,509 1,226,700 1,434,145 1,472,977

Economic services 173,875 196,945 293,172 298,961 402,502 381,271

Agriculture, agrarian reform,
and natural resources 47,048 35,084 69,097 53,217 95,772 100,591
Trade and industry 3,331 3,083 5,987 4,789 6,057 5,575
Tourism 1,376 1,740 2,188 2,002 2,157 1,692
Power and Energy 1,758 2,223 5,828 4,938 12,887 2,437
Water resources, development
and flood control 6,604 8,237 14,145 13,723 22,634 18,463
Communication, roads and other
transportation 57,317 71,806 126,257 120,646 167,158 146,430
Other economic services 3,370 16,508 5,292 25,891 8,340 13,053
Subsidy to LGU's 53,066 58,263 64,378 73,756 87,496 93,031

Social services 255,533 293,714 320,210 377,492 411,786 415,840

Education, culture and manpower
development 131,217 146,323 167,425 186,635 208,719 225,141
Health 13,864 13,538 18,238 28,664 23,415 30,998
Social security, welfare 46,245 58,558
and employment 52,169 69,556 75,620 48,746
Land distribution 4,098 4,422 5,290 4,127 1,286 4,028
Housing and community
development 3,033 2,752 7,938 5,017 8,401 7,145
Other social services 975 6,529 1,093 5,523 1,849 1,435
Subsidy to LGU's 56,101 61,593 68,057 77,970 92,496 98,347

Defense 47,634 51,527 62,188 61,045 62,967 91,546

General public services 168,998 161,712 202,389 207,355 272,960 280,819

General administration 65,179 48,598 71,009 62,288 96,323 88,943

Public order and safety 56,241 60,503 72,006 74,669 93,405 107,051
Other general public services 5,123 6,000 7,871 11,394 13,235 10,400
Subsidy to LGU's 42,454 46,611 51,503 59,004 69,997 74,425

Net lending 1,707 8,250 9,750 12,000 5,064 9,258

Debt service fund 299,807 339,998 267,800 269,847 278,866 294,244

Note : Details may not add up to totals due to rounding off.

Source : Department of Budget and Management, Budget Planning Bureau.

NSO PHILIPPINE YEARBOOK

TABLE 21.5 Consolidated Statement of Receipts, Expenditures

and Percentage Distribution of Local Government Units: 2007-2009
(Million Pesos)

2007 2008 2009

Particulars
Amount Percent Amount Percent Amount Percent

Beginning cash balance* 36,900.41 57,542.37 98,542.41

Receipts 233,588.11 100.00 263,881.72 100.00 298,599.62 100.00

Revenues 231,675.90 99.18 262,127.91 99.34 297,015.25 99.47

Tax revenue 197,961.32 85.45 225,887.86 86.17 251,459.03 84.66

Internal revenue allotment 148,445.36 74.99 169,879.43 75.21 189,956.48 75.54

Real property tax 18,630.61 9.41 22,603.78 10.01 25,882.88 10.29
Local taxes 30,885.35 15.60 33,404.65 14.79 35,619.67 14.17

Nontax revenues 33,714.58 14.55 36,240.05 13.83 45,556.22 15.34

Operating and miscellaneous 18,894.16 56.04 19,263.81 53.16 19,534.26 42.88

Capital revenue 1,125.32 3.34 1,087.48 3.00 1,039.18 2.28
Grants 5,886.91 17.46 707.87 1.95 9,212.47 20.22
Extraordinary income 1,093.19 3.24 446.01 1.23 404.32 0.89
Interfund transfer 663.56 1.97 632.36 1.74 766.91 1.68
Other receipts 6,051.44 17.95 14,102.52 38.91 14,599.08 32.05

Borrowings 1,912.21 0.82 1,753.81 0.66 1,584.37 0.53

Total financial resources 270,488.52 321,424.09 397,142.03

Expenditures 212,946.15 100.00 222,881.68 100.00 246,985.15 100.00

General services 95,977.76 45.07 103,303.97 46.35 116,747.94 47.27

Economic services 40,350.58 18.95 42,334.35 18.99 46,726.19 18.92
Social services 44,218.87 20.77 47,670.09 21.39 51,451.22 20.83
Others 32,398.94 15.21 29,573.27 13.27 32,059.80 12.98

Ending cash balance 57,542.37 98,542.41 150,156.88

(surplus or deficit)

*
Note: Levels are consistent with the ending cash balance of the previous year.

Source: Department of Budget and Management.

 PUBLIC FINANCE

TABLE 21.6 Outstanding Debt - Indicators: 2003-2010

(Billion Pesos)

Indicators 2003 2004 2005 2006 2007 2008 2009 2010

1) National Gov't. Outstanding Debt 3,355.1 3,811.9 3,888.2 3,851.5 3,712.5 4,220.9 4,396.6 4,718.2
Domestic 1,703.8 2,001.2 2,164.3 2,154.1 2,201.2 2,414.4 2,470.0 2,718.2
Foreign 1,651.3 1,810.7 1,723.9 1,697.4 1,511.3 1,806.5 1,926.6 2,000.0

2) By Maturity 1,703.8 2,001.2 2,164.3 2,153.9 2,201.2 2,414.4 2,470.0 2,718.2

Short-term 496.2 596.2 637.6 662.0 614.1 770.3 622.2 527.4
Medium-term 753.0 864.1 894.5 780.7 863.9 810.1 760.1 718.3
Long-term 454.6 540.9 632.2 711.2 723.2 834.0 1,087.7 1,472.5

3) Contingent Obligations 708.5 833.6 586.3 569.9 484.0 545.6 614.1 549.8
Domestic 22.6 33.1 48.2 72.1 64.9 72.9 79.5 100.4
NG Direct Guarantee 22.4 32.9 48.0 72.0 64.8 72.8 79.4 100.3
Assumed GFI Guarantee 0.2 0.2 0.2 0.1 0.1 0.1 0.1 0.1
Foreign 685.9 800.5 538.1 497.8 419.1 472.7 534.6 449.4
NG Direct Guarantee 670.8 787.8 529.5 492.2 415.4 468.6 530.6 445.6
Assumed GFI Guarantee 15.1 12.7 8.6 5.6 3.7 4.1 4.0 3.8

4) Total NG Debt by Tupe of Liability 4,063.6 4,645.6 4,474.7 4,421.5 4,196.6 4,766.4 5,010.7 5,267.9
Domestic 1,726.4 2,034.3 2,212.5 2,226.2 2,266.2 2,487.3 2,549.5 2,818.6
Direct Liabilities 1,701.5 1,998.9 2,162.0 2,151.8 2,198.9 2,412.1 2,467.7 2,715.9
Assumed Liabilities 2.3 2.3 2.3 2.3 2.3 2.3 2.3 2.3
Guaranteed Liabilities 22.6 33.1 48.2 72.1 65.0 72.9 79.5 100.4
Foreign 2,337.2 2,611.3 2,262.2 2,195.3 1,930.4 2,279.1 2,461.2 2,449.3
Direct Liabilities 1,643.3 1,804.9 1,720.7 1,696.4 1,511.2 1,806.4 1,926.6 1,999.9
Assumed Liabilities 8.0 5.8 3.3 1.1 0.0 0.0 0.0 0.0
Guaranteed Liabilities 685.9 800.6 538.2 497.8 419.2 472.7 534.6 449.4

5) Total Interest Payments 226.4 260.9 299.8 310.1 267.8 272.2 278.9 294.2
Domestic 147.6 170.0 190.4 197.3 157.2 170.5 164.7 175.7
Foreign 78.8 90.9 109.4 112.8 110.6 101.7 114.2 118.5

6) Total Principal Payments 243.6 340.8 379.1 544.2 346.3 340.4 343.4 395.5
Domestic 147.3 222.4 253.5 380.9 284.0 259.9 244.5 271.2
Foreign 96.3 118.4 125.6 163.3 62.3 80.5 98.9 124.3

Source: Bureau of Treasury.

NSO PHILIPPINE YEARBOOK

TABLE 21.7 Outstanding Debt of National Government: 2008-2010

(Million Pesos)

Increase/
Institution and Country 2008 2009 2010
(Decrease) Percent Change

Total 4,220,903 4,396,640 4,718,171 321,531 7.31

Foreign Debt 1,806,475 1,926,599 1,999,969 73,370 3.81

NG Loans 793,526 826,715 828,715 2,000 0.24

Direct Loans 793,465 826,671 828,689 2,018 0.24

Availed by Agencies 720,867 759,565 761,253 1,688 0.22

Relent to GOCCs 72,598 67,106 67,436 330 0.49

Assumed Loans 61 44 26 (18) (40.91)

NG Securitized Loans 1,012,949 1,099,884 1,171,254 71,370 6.49

Domestic Debt 2,414,428 2,470,040 2,718,202 248,162 10.05

Direct Loans 2,412,134 2,467,746 2,715,908 248,162 10.06

Availed by Agencies 13,586 6,955 6,807 (148) (2.13)

Government Securities 2,398,548 2,460,791 2,709,101 248,310 10.09

Assumed Loans 2,294 2,294 2,294 0 0.00

Note: Excludes contingent accounts.

Source: Bureau of Treasury.

 PUBLIC FINANCE

TABLE 21.8 Collections of the Bureau of Internal Revenue, by Tax Type: 2008 and 2009
(In Million Pesos)

Increase
Tax Classification 2009 2008 Percent
(Decrease)

Total tax collection 750,287.68 778,580.80 -28,293.12 -3.63

From BIR Operations 722,756.98 746,265.84 -23,508.86 -3.15

I. Taxes on net income and profit 435,371.71 482,247.49 -46,875.78 -9.72

A. Company, corporate enterprise 254,372.18 285,269.33 -30,897.15 -10.83

1. Corporate 113,504.50 141,956.94 -28,452.44 -20.04
2. Withholding at source 140,867.67 143,312.39 -2,444.72 -1.71
B. Individual 136,691.76 150,936.10 -14,244.34 -9.44
1. Individual 7,329.54 6,318.56 1,010.98 16.00
2. Withholding on wages 111,813.37 126,787.27 -14,973.90 -11.81
3. Capital gains 6,109.02 6,568.76 -459.74 -7.00
4. Withholding source 11,439.83 11,261.52 178.31 1.58
C. Others 44,307.77 46,042.06 -1,734.29 -3.77
1. Bank deposits 17,253.70 14,397.14 2,856.56 19.84

II. Excise taxes 60,547.89 61,415.40 (867.51) -1.41

1. Alcohol products 20,637.50 19,838.52 798.98 4.03

2. Tobacco products 24,229.80 27,554.88 (3,325.08) -12.07
3. Petroleum products 12,772.05 11,380.15 1,391.90 12.23
4. Miscellaneous products 2,183.49 1,975.62 207.87 10.52
5. Mining/Mineral products 718.77 660.31 58.46 8.85
6. Tobacco inspection fee 6.28 5.92 0.36 6.08

III. Value-Added Tax 168,294.02 140,318.44 27,975.58 19.94

IV. Percentage Taxes 42,837.85 40,814.00 2,023.85 4.96

1. Banks or financial institution 19,934.90 19,266.45 668.45 3.47
2. Insurance premiums 2,002.15 1,819.18 182.97 10.06
3. Amusement 526.06 141.16 384.90 272.67
4. Other percentage and franchise 20,374.75 19,587.21 787.54 4.02

V. Other Taxes 43,236.21 53,785.47 -10,549.26 -19.61

1. Transfer taxes 1,425.97 1,278.52 147.45 11.53
2. Documentary stamp tax 37,483.71 40,053.56 (2,569.85) -6.42
3. Miscellaneous 3,849.90 11,783.35 -7,933.45 -67.33

From Non-BIR Operations 27,530.70 32,314.96 (4,784.26) (14.81)

1. Taxes on treasury bills/
government securities 27,054.07 31,644.92 (4,590.85) (14.51)
2. Travel tax 476.63 670.04 -193.41 -28.87

Note: Details may not add up to totals due to rounding.

Source: Bureau of Internal Revenue.

NSO PHILIPPINE YEARBOOK

Table 21.8a Bureau of Internal Revenue Share in National

Government Tax Revenues: CY 2000-2010
.

Other Agencies Share in

National Government Tax BIR Share in Government
Year BIR Collections Government Tax
Revenues Tax Revenues (Percent)
Revenues (Percent)

2010 1,093,643 822,623 25.78 74.22

2009 981,631 750,287 23.57 76.43

2008 1,049,179 778,571 25.79 74.21

2007 932,937 713,605 23.51 76.49

2006 859,857 652,734 24.09 75.91

2005 705,615 542,697 23.09 76.91

2004 604,964 470,329 22.26 77.74

2003 550,468 427,350 22.37 77.63

2002 507,637 402,742 20.66 79.34

2001 493,608 388,679 21.26 78.74

2000 460,034 360,802 21.57 78.43

Note: CY 2005 National Government Tax Revenues and BIR Collection includes DST collection and Tax Expenditures.

Source: Bureau of Treasury.

TABLE 21.9 Bureau of Customs' Cash Collection: 2006-2009

(Million Pesos)

Source of Income 2006 2007 2008 2009

Total 198,161 209,439 221,308 242,835

Import duties 68,533 66,919 74,432 81,593

Non Oil 57,442 56,366 61,675 65,869
Oil 11,091 10,553 12,757 15,724
Crude Oil 8,004 7,255 8,089 9,928
Oil Products 3,087 3,297 4,668 5,796

Import Tax 129,628 142,520 146,876 161,242

Value Added Tax 118,869 129,132 131,243 142,827
Spec (Excise) 10,759 13,388 15,633 18,415

Note: Details may not add up to totals due to rounding.

Source : Bureau of Customs.

 PUBLIC FINANCE

TABLE 21.9a Bureau of Customs' Volume and Value of Imports: 2008-2009

(Volume in Thousand Tons, Value in Million Pesos)

Volume Value
Source
2009 2008 2009 2008

Total 54,895 52,703 1,947,926 1,872,800

Dutiable 42,996 41,011 1,270,606 1,199,334

Non Oil 25,159 23,805 864,233 802,786
Oil 17,837 17,206 406,373 396,548
Crude Oil 11,941 11,659 252,296 251,067
Oil Products 5,896 5,547 154,077 145,481

Non-Dutiable 11,899 11,692 677,320 673,466

Non Oil 11,899 11,692 677,320 673,466
Oil - - - -

Total 54,895 52,703 1,947,926 1,872,800

Dutiable 42,996 41,011 1,270,606 1,199,334

Consumption 42,684 40,623 1,226,710 1,154,321
Warehousing 312 388 43,896 45,013

Non-Dutiable 11,899 11,692 677,320 673,466

For consumption 5,022 4,203 62,164 59,787
For Re-export 6,877 7,489 615,156 613,679
Duty-free 52 67 6,747 7,224
PEZA 4,769 4,828 506,083 502,896
Regular Re-Export 2,056 2,594 102,326 105,559

Note: Details may not add up to totals due to rounding.

Source : Bureau of Customs.

NSO PHILIPPINE YEARBOOK

TABLE 21.10 Rates of Tax on Citizens and Residents

(As of January 2000)

Income Subject to Tax Tax Due

On taxable income

Not over P10,000 5%

Over P10,000 but not over P30,000 P500 plus 10% of excess over P10,000
Over P30,000 but not over P70,000 P2,500 plus 15% of excess over P30,000
Over P70,000 but not over P140,000 P8,500 plus 20% of excess over P70,000
Over P140,000 but not over P250,000 P22,500 plus 25% of excess over P140,000
Over P250,000 but not over P500,000 P50,000 plus 30% of excess over P250,000
Over P500,000 P125,000 plus 32% of excess over P500,000 in 2000

Source : Bureau of Internal Revenue.