BY : GROUP 3 (BSA)

DEVELOPMENT
POLICIES &
PROGRAMS
(FED MTH | 10:30-12:00)
 HUMAN
DEVELOPMENT
POLICY
 DEFINITION
A human development policy refers to a set of
strategies, programs, and initiatives aimed at
improving the well-being, capabilities, and
opportunities of individuals within a society. Such
policies are designed to address various aspects
of human development, including education,
healthcare, income, social inclusion, and more.
Human development policies are typically rooted
in the goal of enhancing the overall quality of life
and fostering human potential (UNDP, 2015).
Importance of human development policies

Enhancing Human Capital

Human development policies play a critical role

in enhancing human capital. By investing in
education and healthcare, these policies help
individuals develop their skills and knowledge. This
improves their productivity and employability,
contributing to overall economic development.
Importance of human development policies

Reducing Inequality

Human development policies aim to reduce

inequality within a society. They focus on ensuring
that all individuals have access to essential
services like education, healthcare, and social
protection, regardless of their background. This
leads to a fairer and more inclusive society.
Importance of human development policies

Social Inclusion

Human development policies promote social

inclusion by addressing the needs of all
individuals, including those with disabilities and
diverse cultural backgrounds.
 Types of Human Development Policies
Education policies
Education policy refers to a set of
guidelines, principles, and laws
formulated by governments or
educational institutions to guide the
development and management of
education systems. The specific goals
and strategies of education policies
can vary from one country or region
to another.
Example
·
No Child Left Behind Act" (NCLB)
in the United States.
·
"K to 12 Program" implemented
by the Department of Education
(DepEd)” in the Philippines
 Types of Human Development Policies

Healthcare policies

Healthcare policy can be defined as Example

a set of principles, rules, and
regulations established by "National Health Insurance
governments or organizations to Program" (NHIP)
guide the management, delivery,
and financing of healthcare
services, with the aim of promoting ·"Universal Health Coverage
health and providing medical care (UHC)
to individuals and communities.
 Types of Human Development Policies

Poverty reduction
Example
policies
A poverty reduction policy is a ·
comprehensive strategy to alleviate and Pantawid Pamilyang Pilipino
eradicate poverty by improving economic
conditions, access to education, healthcare, Program (4Ps)
and employment opportunities for
impoverished individuals and communities. Millennium Development Goals
It often includes targeted interventions, (MDGs)" initiative
safety nets, and economic empowerment
programs with the aim of elevating people
out of poverty.
QUESTIONS?
 CASE
QUESTIONS?

STUDY
 Education policy in Finland
Finland’s education policy, guided by the principle of providing equal
opportunities for all, has led to the country being recognized for its high-quality
education system. The policy emphasizes quality, efficiency, equity, and
internationalization. It aims to provide everyone with equal learning rights by
offering free education at all levels, from pre-primary to higher education.

Positive Outcomes Challenges

The reforms have led to
increased education Negative Outcomes Common policy challenges
for evaluation of education
standards, decreased systems include meeting
educational inequality, and a Some of the problems with
Finland’s education system information needs at the
competitive economy based system level, monitoring
on a highly-educated, skilled include a lack of interest in
arts, lack of appreciation of key outcomes of the
workforce. There has also been education system, and
an increase in the capacities of teachers, lack of parent
involvement, funding maximizing the use of
teachers, schools, and system-level information.
education providers to improve constraints, and attracting
and retaining qualified
learning outcomes.
teachers.
 Healthcare policy in Canada
Canada’s healthcare policy emphasizes universal health coverage. The
government has invested heavily in healthcare infrastructure and manpower,
ensuring that every citizen has access to quality healthcare services. This policy
has significantly reduced the mortality rate and improved the overall health of
the population.

Positive Outcomes Challenges

Life expectancy in Canada is
high and health inequalities Negative Outcomes The association between the
socio-economic
persist. The healthcare system
has led to improvements such Some negative aspects background and students’
as reduced out-of-pocket include shortage of skills in Finland has been
expenses for individuals and healthcare providers in one of the weakest in the
families. some regions leading to OECD countries.
reduced access to care,
longer wait times, and
overworked healthcare
providers. There can also be
long wait times for non-
emergency procedures.
 Poverty reduction policy in Brazil
Brazil has implemented a poverty reduction policy that includes social
protection programs and job creation initiatives. The government provides
financial assistance to low-income families through a program called Bolsa
Familia. This policy has successfully lifted many people out of poverty.

Positive Outcomes Challenges

Brazil’s recent success in
complementing market-oriented Negative Outcomes The redistributive potential of
the Brazilian tax system is
reforms with progressive social
policies has helped it achieve underexploited. Major
Despite a sharp fall in income
more rapid poverty reduction. inequality since the early challenges such as access to
Programs such as Bolsa Familia 2000s as a result of the non-medicare services, wait
have led to improvements in implementation of times for specialist and
children’s nutrition and health, intersectoral universal social elective surgical care, and
higher school attendance, policies, Brazil is still a very fragmented and poorly
reduced grade repetition, unequal country. The coordinated care will continue
reduced entry for children into the economic crisis induced by the to preoccupy governments in
labor market, and increased pandemic has nearly halted its pursuit of improved health
prenatal visits. poverty reduction progress system performance.
and widened disparities.
 Factors Affecting
Implementation of Human
Development Policies
A. Political Factors
Political factors play a significant role in the implementation of
human development policies. The political environment, the
stability of the government, and the priorities set by the
policymakers can greatly influence the success or failure of these
policies.

B. Economic Factors
Economic factors such as the state of the economy, budget
allocations, and income distribution also have a substantial impact.
A strong economy with sufficient resources can support robust
human development policies. However, economic challenges like
budget constraints or high income inequality can pose significant
obstacles to policy implementation.

C. Social Factors
Social factors include cultural norms, societal attitudes, and public
awareness about the issues addressed by the policies. These factors
can either facilitate or impede policy implementation.
QUESTIONS?
MONETARY
POLICY
What is Business
Monetary Policy?
Monetary policy refers to the actions and strategies
implemented by a country's central bank or
monetary authority to control and regulate the
money supply and interest rates in the economy.
The primary goals of monetary policy are usually to
stabilize prices, control inflation, support economic
growth, and maintain employment levels. Central
banks use various tools, such as adjusting interest
rates, buying or selling government securities, and
setting reserve requirements for banks, to influence
the money supply and, consequently, economic
activities within the country.
 TYPES OF
MONETARY
POLICY
 Types of monetary policy

1. Expansionary Monetary Policy

- During economic slowdowns, central banks use expansionary strategies to increase the
money supply, boost consumer spending, and reduce unemployment. Central bank increseas
the money in circulation by:

a.) Lowering Interest Rates - Central banks reduce interest rates to make borrowing
cheaper. This encourages spending and investment, stimulating economic activity.

b.) Buying Open Market Operations - Central banks buy government securities, injecting
money into the economy. This boosts reserves in banks and encourages lending.

c.) Lowering Reserve Requirements - By decreasing the amount of money banks are
required to keep in reserves, they have more funds available for lending, fostering economic
growth.
 Types of monetary policy
2. Contractionary Monetary Policy

- A contractionary monetary policy is a strategy used by the government or central bank to slow
down or reduce the growth of the economy. It is usually done to control inflation, which is when
prices of goods and services increase over time. This policy is implemented by reducing the amount
of money available in the economy, which can help prevent excessive borrowing, spending, and risky
investments. The goal is to create a more stable and balanced economy by:

a.) Raising Interest Rates - Central banks increase interest rates to make borrowing more expensive.
This discourages spending and investment, controlling inflation and preventing the economy from
overheating.

b.) Selling Government Securities - Central banks sell government bonds, absorbing money from
the economy. This reduces the money supply, curbing inflationary pressures.

c.) Raising Reserve Requirements - Increasing the amount of money banks must keep in reserves
limits their lending capacity, slowing down economic activity.
 Monetary Tools
1. Open Market Operations 2. Discount Rate 3. Reserve Requirements

Open market operations refer to The discount rate is the interest rate at Reserve requirements indicate
the central bank's buying and which a central bank lends money to the minimum reserves a bank
selling of government securities. commercial banks. To increase the must maintain relative to its
When the central bank aims to money supply, the central bank can
liabilities, often expressed as a
boost the money supply reduce the discount rate, making
percentage of deposits. Adjusting
borrowing cheaper for banks. This
(expansionary policy), it purchases this ratio allows a central bank to
promotes lending and stimulates
these securities, injecting money impact a bank's lending capacity.
economic activity. Conversely, raising
into the economy. Conversely, to Lowering the reserve requirement
the discount rate can dampen
reduce the money supply enables banks to lend more,
economic activity by increasing
(contractionary policy), it sells boosting the money supply.
borrowing costs.
these securities, withdrawing Conversely, increasing the
money from the economy. requirement reduces the money
supply as it limits the funds banks
can lend.
 Regulations of Central Banks to
Financial Institutions
Financial Institutions - acts as the intermediary between the suppliers and users of funds e.g.
commercial banks, insurance companies, mutual funds, and investments banks.

1. Capital Requirements - refers to the minimum amount of capital that the central bank
must hold to ensure stability, financial resilience, and the ability to perform its functions
effectively.

2. Liquidity Requirements - refers to the need for the central bank to maintain an adequate
level of liquid assets to ensure smooth and efficient functioning of the financial system.

3. Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) Regulations -

pertain to the measures and guidelines implemented to prevent, detect, and address
activities associated with money laundering and the financing of terrorism.
 Regulations of Central Banks to
Financial Institutions

4. Anti Discrimination Laws - refer to regulations and guidelines aimed at preventing

discriminatory practices within the financial sector. These laws prohibit unfair treatment
based on characteristics such as race, gender, ethnicity, religion, or other protected
attributes.

5. Risk Management Regulations - refers to rules and guidelines put in place by regulatory
authorities to ensure that financial institutions and other entities effectively identify,
assess, and manage risks.

6. Consumer Protection Regulations - refer to rules and standards established to safeguard

the rights and interests of consumers in financial transactions.
FISCAL
POLICY
 What is Fiscal Policy?
Fiscal policy refers to the use of government
spending and tax policies to influence economic
conditions, especially macroeconomic conditions.
These include aggregate demand for goods and
services, employment, inflation, and economic
growth. It shapes a nation's economic environment
and is often used in conjunction with monetary
policy to achieve a balanced and sustainable
economic outlook.

This means that to help stabilize the economy,

the government should run large budget deficits
during economic downturns and run budget
surpluses when the economy is growing. These are
known as expansionary or contractionary fiscal
policies, respectively.
 How does this work?
In the short term, governments may focus on
macroeconomic stabilization—for example, expanding
spending or cutting taxes to stimulate an ailing
economy, or slashing spending or raising taxes to
combat rising inflation or to help reduce external
vulnerabilities. The priorities may reflect the business
cycle or response to a natural disaster or a spike in
global food or fuel prices.

In the longer term, the aim may be to foster

sustainable growth or reduce poverty with actions on
the supply side to improve infrastructure or education.
Although these objectives are broadly shared across
countries, their relative importance differs, depending on
country circumstances. To achieve the economic
stability for longer term, the drivers can be development
levels, demographics, or natural resource endowments.
 TOOLS &
TYPES OF
FISCAL POLICY
Government Spending
Government spending refers to money spent by
the public sector on the acquisition of goods and
provision of services such as education,
healthcare, social protection, and defense.

Purpose
To supply goods and services that are not supplied
by the private sector, such as defense, roads, and
bridges; merit goods such as hospitals and schools,
and welfare payments and benefits including
unemployment and disability benefits.

To achieve improvements in the supply-side of the

macro-economy, such as spending on education
and training to improve labor productivity.
Fiscal Performance of ASEAN-5 Economies, 2019 to Q3 2023
The return of economic activity after the onset of COVID-19 lockdowns has enabled the Association of
South East Asian Nations-5 (ASEAN-5) to reclaim its status as one of the world’s fastest-growing regional
economies. Evidence is seen from the data culled from the International Monetary Fund’s (IMF) Data
Mapper, and Fiscal Monitor, which both provide country specific databases of key fiscal variables, public
finance developments, and medium-term fiscal projections.
Fiscal Performance of ASEAN-5 Economies, 2019 to Q3 2023
 Taxation
Taxation is the practice of collecting taxes
(money) from citizens based on their earnings and
property. The money raised from taxation supports
the government and allows it to fund police and
courts, have a military, build and maintain roads,
along with many other services.

Purpose
To distinguish between objectives of resource
allocation, income redistribution, and economic
stability.

To invest in and provide public goods and services

that benefit society as a whole including public
infrastructure (roads, bridges, public transportation),
education systems, healthcare facilities, public
safety, and environmental protection.
Expansionary Fiscal Policy
Expansionary fiscal policy, designed to stimulate the economy, is most often
used during a recession, times of high unemployment or other low periods of the
business cycle. It entails the government spending more money, lowering taxes
or both.

The goal of expansionary fiscal policy is to put more money in the hands of
consumers so they spend more to stimulate the economy. Explained in economic
language, the goal of expansionary fiscal policy is to bolster aggregate demand
in cases when private demand has decreased.
Increase in Government Spending Tax Cuts

The government can allocate more Lowering tax rates or providing

funds to various programs and tax rebates to individuals and
projects, such as infrastructure businesses gives them more
development, healthcare, education, disposable income,
or research. This
increased spending creates jobs and
encouraging spending and
stimulates economic activity. investment.
 Contractionary Fiscal Policy
Contractionary fiscal policy is used to slow economic growth, such as when inflation is
growing too rapidly. The opposite of expansionary fiscal policy, contractionary fiscal
policy raises taxes to cut spending. As consumers pay more taxes, they have less money
to spend, and economic stimulation and growth slow.

Under contractionary fiscal policies, the economy usually grows by no more than 3%
per year. Above this growth rate, negative economic consequences – such as inflation,
asset bubbles, increased unemployment and even recessions – may occur.
Cutting Public
Reducing Public Spending Sector Pay or Jobs
Increasing Taxes
Decreasing government
expenditures on various Raising tax rates or
programs, projects, and Reducing the size of reducing tax deductions
services can have a direct the public workforce or and credits can decrease
impact on economic activity. It lowering government people's disposable
can lead to fewer jobs in the employees' wages can income, leading to reduced
public sector and less further contribute to consumer spending and
government-funded reduced government investment. This helps
infrastructure and services, spending and, reduce overall demand in
which, in turn, reduces overall consequently, less the economy.
demand. economic demand.
 ADVANTAGES
& DISADVANTAGES
Advantages of Fiscal Policy
Short Effect Lag
Can Use Taxation
to Discourage
Stimulus spending will Negative
have an immediate Externalities
effect on the Taxing polluters or
economy as it is a those that overuse
direct component of limited resources can
aggregate demand. Can Target help remove the
negative effects they
Specific Sectors cause while
Targets weaker areas of generating
the economy. For government revenue.
example, in the post-
mining boom, fiscal
spending can be
directed to mining
states such as WA or
QLD rather than growth
states such as NSW or
VIC.
Disadvantages of Fiscal Policy
Political Tool
Interest
It could be influenced Repayments on
and directed to Public Debt
uncertain seats rather
than areas of need. Government budget
especially during deficits may require
elections which they borrowing or the issue of
increase government government bonds
Long Decision Lag which can result in high-
expenditure to attract
votes. interest repayments to
Budget measures can maintain public debt
often take days or weeks
to be passed in both
houses of parliament.
There is also a risk that
budgetary measures
could be rejected or
modified, which can
impact severely on
budget estimates.
What is Business
Development?
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Basic Forms of Business Ownership

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Federation Cooperative
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 DEVELOPMENT OF THE
BANKING AND FINANCIAL
INSTITUTIONS
 Banking and Financial
Institutions
Banks and other Financial
institutions are entities that engage in
financial and monetary transactions.
The services they provide
encompasses financial security, loans
and investments. They are a critical
part of the economy as they help
people get the money they need
(Investopedia, 2023). Without them, the
economy will collapse as they are the
stabilizers of the economy.
 The Role of Banks and
financial institutions
Banks and financial institutions act as intermediaries,
facilitating the flow of funds between savers and
borrowers. They not only create money through lending
but also provide crucial credit that fuels economic growth,
enabling individuals and businesses to seize opportunities
and meet diverse needs. These financial intermediaries
enhance the economy by efficiently distributing funds
through various financial services, contributing to job
creation, innovation, and sustainable growth.

Their role as financial middlemen promotes

inclusivity, granting access to vital financial services for
individuals and businesses across diverse segments of
society. In essence, banks and financial institutions play a
pivotal role in advancing both economic prosperity and
societal well-being.
Types of Financial Institutions

Credit Union
Central banks Retail and
A central bank, reserve Commercial Banks A credit union is a form of
bank, or monetary financial cooperative that offers
Retail and commercial banking conventional banking services.
authority is an represent two sides of the same Credit unions vary in size,
organization responsible sector, delivering banking ranging from small, volunteer-
for overseeing a country's services and products to distinct based operations to larger
or monetary union's customer groups. Retail banks entities with participants across
currency and monetary cater to individual customers, the country. They can be
policy. established by major
while commercial banks focus on corporations, organizations, and
Example: providing services to corporate other entities to serve their
customers and businesses. employees and members.
Banko Sentral ng
Pilipinas Example:
Bank of the Philippine
Federal Reserve Bank Islands

BDO
Types of Financial Institutions

Investment
Brokerage Firms Saving and Loan Banks
A brokerage firm, or Associations (S&L)
brokerage company, An investment bank is a financial
Savings and loan associations services company that acts as an
serves as an intermediary are financial institutions similar intermediary in large and
that links buyers and to banks that specialize in complex financial transactions.
sellers to execute providing mortgage loans to An investment bank is usually
transactions involving home buyers, making loans from involved when a startup company
stock shares, bonds, deposits usually gathered from prepares for its launch of an
options, and other the local community. initial public offering (IPO) and
financial instruments. when a corporation merges with a
Example: competitor.
AAA Equities Inc. Example: Example:
Public safety savings First Metro Investment
and loan associations Corportion
Col Financial Group Inc.
Types of Financial Institutions
Mortgage
companies
A mortgage company is a
specialized financial entity
involved in the origination and/or
financing of mortgages for
residential or commercial
properties.
Insurance
Companies
Insurance companies function as
financial intermediaries that
provide direct insurance or
reinsurance services, supplying
financial safeguards against
potential future risks.
Example:
Sterling Insurance
Company Inc.
The role of Monetary and Fiscal policies on the
develoment of banking and Financial Institutions
Monetary Policy:
Interest Rates
Central banks utilize monetary tools to
manage interest rates, affecting borrowing
behavior. Lower interest rates encourage
loans, boosting economic activity and
supporting banks in lending.
Money Supply
Regulation of the money supply by
central banks is crucial for controlling
inflation and maintaining economic
stability. Changes in the money supply
impact banks' liquidity, influencing lending
and investment activities.
Fiscal Policy:
Government Spending and Taxation
Fiscal policy involves government spending
and taxation. Increased government spending
can stimulate economic growth, benefiting
financial institutions through increased
business activities. Tax policies can also
impact individuals' and businesses'
disposable income, influencing their financial
decisions.
Infrastructure Investment
Fiscal policies that prioritize infrastructure
projects can have a direct effect on the
banking sector, as these projects often require
financing from financial institutions.
The role of Monetary and Fiscal policies on the
develoment of banking and Financial Institutions
Regulation and Supervision:
Inflation and Exchange Rates:
Both monetary and fiscal policies
contribute to the regulatory framework Inflation Control
of the financial sector. Prudent . Monetary policy aims to control
regulations and effective supervision inflation. Stable prices positively impact
enhance the stability and soundness of the banking sector by providing a
banks and financial institutions, predictable economic environment.
ensuring their responsible operation.

Credit Availability Exchange Rates

. Monetary and fiscal policies can
. Monetary policies shape the influence exchange rates. Stable
availability and cost of credit. Lower exchange rates contribute to financial
interest rates encourage borrowing, market stability and facilitate
promoting investments, and international transactions for banks.
consumption. Fiscal policies supporting
credit-worthy borrowers further
influence credit availability.
The role of Monetary and Fiscal policies on the
develoment of banking and Financial Institutions

Financial Market Confidence:

Communication and Transparency

Clear communication of monetary and fiscal policies is essential for

fostering confidence in financial markets. Uncertainty can lead to
market volatility, affecting the operations of banks and financial
institutions. Ensuring transparency is crucial for maintaining
stability and trust in the financial sector.
EFFECTS OF TAXATION
ON DEVELOPMENT
WHAT IS TAXATION ?
Financial Obligations: Taxation imposes financial
responsibilities on citizens based on their income
and assets.

Government Revenue: Taxes provide the primary

source of revenue for the government.

Funding Essential Services: Revenue from taxes

sustains vital services such as the police, courts,
military, roads, schools, and hospitals
.
Economic Boost: Investments from tax money
contribute to economic growth by creating jobs and
improving living conditions.

Support for Development: Taxation serves as a

framework for a nation's economy, funding
infrastructure and services crucial for overall
development.
TAX POLICIES IN PHILIPPINES
The taxation policy in the Philippines is
governed by several key laws and regulations,
including the Republic Acts outlined below:

1. Corporate Recovery and Tax Incentives for

Enterprises Act (CREATE Act)
2. Tax Reform for Acceleration and Inclusion
(TRAIN) Law
3. Article VI, Section 28 of the Constitution
4. National Internal Revenue Code
5. Local Government Code of 1991
TAX STRUCTURES IN PHILIPPINES
The Updated (2023) Taxes by ASEAN BRIEFING
& ASEAN TAX PHILIPPINES are as follows:
Corporate Income Tax
Minimum Corporate Income Tax
Withholding Tax
Fringe Benefits Tax
Branch Profit Remittance Tax
Improperly Accumulated Earnings Tax
Personal Income Tax
Value-Added Tax
 1. Corporate Recovery and Tax Incentives for
Enterprises Act (CREATE Act)
The CREATE Act is designed to make businesses in
the Philippines more competitive globally. It does so
by reducing corporate income tax rates over time
and providing incentives to enterprises.
A. Corporate Income Tax:
Foreign companies experienced a reduction from 25% (July
2023) to 20% by 2027. Domestic micro, small, and medium-
sized companies benefit from a preferential rate of 20%.

Aiming to attract foreign investment and support local

businesses by providing a competitive tax environment.
B. Minimum Corporate Income Tax (MCIT):
Imposes a minimum tax of 2% on the gross income of both
domestic and resident foreign corporations, ensuring a
baseline tax payment.

Designed to prevent companies from avoiding taxes and

helps new businesses manage their taxes during their initial
years.
C. Withholding Tax:
Various withholding taxes on dividends, interest, and
royalties.

Ensures that a portion of income is retained by the

government at the time of payment, providing a steady
stream of revenue.
C. Withholding Tax:
Designed to prevent companies from avoiding taxes and
helps new businesses manage their taxes during their initial
years.
Imposes a minimum tax of 2% on the gross income of both
domestic and resident foreign corporations, ensuring a
baseline tax payment.

Dividends Interest Royalties

When a company in the Philippines If the company pays Similarly, if the company
gives money to its shareholders interest to someone pays money to another
(dividends), it takes away 25% of outside the Philippines, company for using its
that money as tax if the it keeps 20% of that inventions or ideas
shareholders live in the Philippines. If payment as tax, unless (royalties), it keeps 20% if the
the shareholders are from another there's a specific deal company is in the
country, the tax is 15%, but it can be between countries that Philippines. If the company is
reduced if there's a special says otherwise. from another country, 25% is
agreement between the countries. kept as tax.
D. Fringe Benefits Tax:
Tax on non-monetary benefits provided by employers to
certain employees, particularly those in managerial and
supervisory positions.

Companies offer fringe benefits as a form of compensation

to attract and retain talented employees. These benefits
can include perks like housing, vehicles, or travel expenses.

Ensures fair taxation on non-monetary compensations,

contributing to government revenue.
E. Branch Profit Remittance Tax:
Foreign firms operating through branches in the Philippines
are subject to an additional 15% tax on earnings remitted
abroad.

A way for the Philippines to collect revenue from profits

generated by foreign companies operating in the country.

F. Improperly Accumulated Earnings Tax (IAET):

Tax on companies holding excessive cash instead of
distributing dividends or reinvesting.

Encourages companies to use their profits for productive

purposes rather than hoarding excess cash.
 2. Tax Reform for Acceleration and Inclusion
(TRAIN) Law
The CREATE Act is designed to make businesses in
the Philippines more competitive globally. It does so
by reducing corporate income tax rates over time
and providing incentives to enterprises.
A.Personal Income Tax:
Adjusts individual income tax rates based on income
brackets.

Aims to provide relief to low and moderate-income earners,

allowing them to have more disposable income.
A. Personal Income Tax
The TRAIN Act, a recent statute, altered the amount of tax that
people must pay. Starting from January 1, 2023, this law will
result in income tax payments that range from two to five
percent lower for those making less than PHP 8 million (about
$142,900). As a result, individuals with low and moderate
earnings will have a little extra money in their pockets.
B. Value-Added Tax (VAT):
Imposes a 12% VAT on almost all service and import sales, as
well as the exchange, barter, or lease of goods or properties.

A significant source of government revenue, ensuring a

broad-based consumption tax.

C. VAT Exemption:
Certain exemptions for registered exporters on local
purchases of goods and services for specific periods.

Supports export-oriented businesses by reducing the tax

burden on certain transactions.
 3. Article VI, Section 28 of the Constitution
Article VI, Section 28 of the Constitution empowers
the government to impose taxes. It is the
constitutional basis for the taxation system in the
Philippines, providing the legal authority for taxation.
National Internal Revenue Code:
The NIRC is the comprehensive law governing taxation in the
Philippines. It covers a wide range of taxes, including income
tax, VAT, and other specific taxes. The tax rates, rules, and
regulations mentioned in the context of the Philippines are
derived from the NIRC.

Serves as the foundation for the country's tax system,

providing the legal framework for taxation.
 4. Local Government Code of 1991

The Local Government Code provides local

government units with the authority to levy certain
taxes. While the specific taxes mentioned in the
given information are not explicitly tied to this code,
it's important to note that local governments in the
Philippines have the power to impose taxes and fees
to fund their local initiatives and services.
IMPORTANT NOTES AND EXPLANATIONS FOR ECON. DEVELOPMENT
Taxation in General: Taxation is a crucial aspect of
government finance, enabling the state to fund public
services, infrastructure, and other essential functions.
Fairness and Equity: Tax laws often aim for fairness by
adjusting rates based on income levels, encouraging
economic growth, and discouraging tax evasion.
Revenue Generation: Taxes are a primary source of
government revenue, funding various programs and projects
that benefit the entire nation.
Encouraging Investment: Tax incentives, as seen in the
CREATE Act, are designed to attract foreign investment and
support local businesses.
Social Considerations: Adjustments in personal income tax
rates, as seen in the TRAIN Law, reflect social considerations,
providing relief to lower-income individuals.
THE ROLE OF TAXATION

Taxation holds a paramount role in the

development of the Philippines.
According to Oyedukon (2022) The
revenue generated through taxation
fuels the government's capacity to invest
in infrastructure, deliver essential public
services, and foster an environment
conducive to both domestic and foreign
investment.
TAXATION CONTRIBUTES TO;

Infrastructure
Social Services:
Development:
Source of fund; Funding Education;
Improved quality of Funding Healthcare;
life; Social welfare programs:
Enhanced Productivity Enhancing human
Economic Growth: capital (Education
and healthcare):
Infrastructure Development
Taxation plays a crucial role in contributing to the development of infrastructure,
including roads, bridges, and public transportation, in several ways:

Improved
Source of fund: quality of life:
Governments allocate a portion of Investment in infrastructure, like
tax revenue to infrastructure public transportation, can
development through their enhance the quality of life for
budgets. This allocation allows for citizens by reducing traffic
the planning and execution of congestion, air pollution, and
projects that improve providing affordable mobility
transportation networks, which are options. This, in turn, can
fundamental for economic growth contribute to public well-being
and public welfare. and economic stability.
Infrastructure Development
Taxation plays a crucial role in contributing to the development of infrastructure,
including roads, bridges, and public transportation, in several ways:

Enhanced Economic
Productivity: Growth:
Efficient infrastructure, made Infrastructure investment often
possible through taxation, can leads to economic growth. Better
enhance productivity by reducing transportation systems, such as
logistics costs for businesses, improved roads and public transit,
making goods and services more can increase mobility, reduce
accessible, and connecting people commute times, and lower
to job opportunities. transportation costs for businesses
and individuals. This, in turn, fosters
economic development and
generates additional tax revenue.
SOCIAL SERVICES
Taxation plays a vital role in funding education, healthcare, and social welfare
programs, which collectively enhance human capital and reduce poverty in a society.
Now, how does taxation contribute to these critical areas?

Funding
Education : 2 Main Contribution
Tax revenues are allocated to
improve the quality of education, Public education: Tax revenue is
build new schools, provide a primary source of funding for
scholarships, train teachers, and public education systems. It
enhance educational resources. A supports the construction and
well-educated workforce maintenance of schools, payment
strengthens the country's human of teachers, and provision of
capital, fostering innovation and
competitiveness. educational resources.
Access and equity: Taxes can be
used to provide equitable access
to quality education by
redistributing resources to
underserved areas and
supporting students from low-
income backgrounds.
SOCIAL SERVICES
Taxation plays a vital role in funding education, healthcare, and social welfare
programs, which collectively enhance human capital and reduce poverty in a society.
Now, how does taxation contribute to these critical areas?

Funding
Healthcare:
A portion of tax revenues is
channeled into the healthcare
sector. This includes constructing
hospitals, clinics, and healthcare
facilities, as well as ensuring the
availability of essential medical
supplies and services.
2 Main Contribution
Public healthcare: Tax funds are
used to support public healthcare
systems, which provide essential
medical services, infrastructure,
and access to healthcare for the
entire population, regardless of
income.
Universal healthcare: Taxes can
be used to achieve universal
healthcare coverage, ensuring that
all citizens have access to
necessary medical care, which can
improve overall health and reduce
poverty due to medical expenses.
SOCIAL SERVICES
Taxation plays a vital role in funding education, healthcare, and social welfare
programs, which collectively enhance human capital and reduce poverty in a society.
Now, how does taxation contribute to these critical areas?

Social welfare Enhancing

programs: human capital
Tax revenues support social (Education and healthcare)
welfare programs aimed at
assisting vulnerable populations. Tax-funded education and
This includes cash transfer healthcare programs improve
programs, housing assistance, human capital by increasing
and food security initiatives. These access to quality education
programs provide essential and healthcare services. A
support to those in need, well-educated and healthy
promoting social inclusivity and population is more productive
reducing poverty. and better prepared to
contribute to the economy.
IV. GLOBAL PERSPECTIVE ON
TAXATION AND DEVELOPMENT
a. Case studies that highlights the successful taxation models and its
impact to economic development
The Nordic tax policy is part of a larger "Nordic model" that combines
a capitalist economic system with a universal welfare system and a
strong political and social consensus. Women's equality,
environmental consciousness and the focus on creativity, innovation
and young people are also linked to this model. Foreign observers,
especially on the left of politics, are still attracted to the
Scandinavian model which is facing internal challenges. However, it
is unclear which aspects of the model are appealing and how much
knowledge admirers possess about Nordic reality. In spite of its
criticisms, the Nordic model remains a popular one among liberal
circles. The Nordic countries have a differentiated tax structure,
consisting of high individual income taxes that are moderately
progressive.
Although, the corporate tax rates are very low compared to
dividends and capital gains. In addition, an increased emphasis is
being placed on pollution taxes with a view to reducing emissions
and increasing revenues. They also have advanced systems of tax
administration including computerization and a strong focus on the
delivery of services to taxpayers. Both the attitudes of taxpayers
and deliberate choices in tax administration and design can be
relied upon to help achieve an excellent level of compliance. The
combination of economic prosperity and social justice makes the
Nordic model attractive. In keeping with the progressive and
multicultural social outlook, it has been able to achieve economic
growth and innovation. Although the high tax rates associated with
this scheme might seem unpleasant, they are justified by the
advantages that it provides and can be seen as a positive
achievement for some progressives.
b. Taxation Trends
(i) Digital taxation:

The taxation debate was dominated by digitalisation of

the economy, which focused on distinguishing between
physical business transactions and virtual ones. Various
taxation policies, including the consumption and
commercial taxes, were also part of these discussions. A
series of innovative policies, such as differential tax levies
on digital services and a variety of gross unjust
withholding taxes targeting digital services have been
introduced.
Implications for Economic Development
Philippines proposes law for taxation of the digital
economy.
The Philippines House of Representatives introduced
the Digital Economy Taxation Act of 2020, aiming to
subject digital economy value to withholding/income
tax and VAT. Despite COVID-19 quarantine measures,
e-commerce and online transactions have shown
resilience, prompting the government to capture
digital transaction value and encourage tax
compliance.
b. Taxation Trends
(ii) Environmental taxation

is an essential component of the EU's

environmental policies. The tax base targets
physical units or a proxy thereof that pose a
specific negative impact on the environment, (UN
et al., 2014). The primary aim of these taxes is to
offset the adverse effects of economic activities
and alleviate the pressures exerted on the
environment, (EEA, 2008).
Implications for Economic Development

House Bill No. 6945, 18th Congress of the Republic

AN ACT ESTABLISHING ENVIRONMENTAL TAXATION FOR THE
PROTECTION OF
PHILIPPINE NATURAL RESOURCES
c. International Comparisons
The Nordic countries have a high level of social
expenditures, which includes direct provision of non-
health social services like childcare. This has led to
public employment positions being created for hard-to-
employ individuals. In contrast, the U.S. has lower public
social expenditures but higher private social
expenditures in categories like health care, pensions,
and childcare. Private outlays in the U.S. for health
expenditure and private pension savings are 5.0 percent
and 4.7 percent of GDP respectively, compared to just 0.1
and 0.9 percent of GDP for the Nordic countries.
WHAT ARE THE DIFFERENT
CHALLENGES FACED IN
TAXATION?
HOW CAN WE LESSEN IT?
1) Tax evasion and avoidance: Many
individuals and businesses evade or
avoid taxes, leading to revenue losses.
Possible solutions:
Strengthen tax enforcement and audit
capabilities.
Implement digital and data-driven tools for
tax monitoring.
Encourage the use of electronic receipts and
invoicing to reduce underreporting.
2) Informal economy: A significant
portion of economic activity is in the
informal sector, making it challenging
to collect taxes.
Possible solutions:
Promote formalization of businesses in the
informal sector.
Offer incentives or simplified tax regimes
for small businesses.
Improve access to financial services
to bring more individuals and
businesses into the formal economy.
3) Tax education and awareness: Many
taxpayers may not fully understand
their obligations or the benefits of
taxation.
Possible solutions:
Conduct nationwide tax education
campaigns.
Offer taxpayer assistance centers and
hotlines for inquiries.
Collaborate with educational institutions
to include tax education in curricula.
4) Tax evasion in online transactions:
Ensuring effective taxation in the digital
economy is a growing concern.
Possible solutions:
Collaborate with international organizations
to address cross-border tax issues.
Implement digital transaction reporting and
taxation mechanisms.
Enforce proper documentation and
reporting for e-commerce businesses.
V. CHALLENGES & REFORMS
b. Reforms
On December 19, 2017, President Rodrigo R. Duterte signed
into law Package 1 of the Comprehensive Tax Reform
Program (CTRP) also known as the Tax Reform for
Acceleration and Inclusion (TRAIN) as Republic Act (RA) No.
10963. The Law took effect on January 1, 2018.The TRAIN aims
to make the Philippine Tax System simpler, fairer, and more
efficient to promote investments, create jobs and reduce
poverty. Along with this objective, the CTRP also aims to
raise revenues that will fund the President's Build, Build, Build
Project that will sustain high and inclusive growth of the
country; and finance investments in our people through
enhanced education, health and social services.
 CHANGE IN THE TAX SCHEDULE
RA 10963 restructures the personal income tax (PIT) schedule, with separate
schedules for compensation income earners (CIES), purely self-employed
individuals and/or professionals (SEPS) whose gross sales or gross receipts and
other non-operating income do not exceed the Value Added Tax (VAT) threshold of
P3 million and mixed income earners.

CHANGES ON THE ESTATE TAX

RA 10963 simplifies the estate tax schedule, from a six-bracket schedule with
rates ranging from 5% to 20%, to a single rate of 6% based on the value of net
estate.

CHANGES ON VALUE-ADDED TAX (VAT) UNDER RA 10963

(i) BROADENING THE VAT BASE
RA 10963 repeals 54 provisions on VAT exemption and zero-rating under special laws
to broaden the VAT base. It also includes electric cooperatives in the definition of sale or
exchange of services subject to VAT.
(ii) WITHDRAWAL OF ZERO-RATED TRANSACTIONS
RA 10963 removes foreign currency denominated sales from
VAT zero-rating and subjects the VAT indirect exporters and
agents only upon the establishment and implementation of an
enhanced VAT refund system.

(iii) RETENTION OF VAT EXEMPTIONS

RA 10963 retains the VAT-exempt status of the following:
Raw Agricultural & Marine Products
Persons with Disabilities
Cooperatives
Educational Services
Health Services
Senior Citizens
THANK YOU !