TAXATION

1. TAXATION AND
SOURCES OF SCHOOL
FINANCE AND FUNDS
THE REVENUE AND
APPROPRIATION SYSTEM
CRISTINE PEARL D. ASCAN
Master of Arts in Education Major in Educational Management

2. TAXATION
It is a means of the
government in increasing its
revenue under the authority of
the law to promote the welfare
and protection of its citizenry

3. It is the collection of the share
of individual and organizational
income by a government under
the authority of the law.

4. CONCEPT OF TAXATION
It is the inherent power of the
state to impose and demand
contribution upon persons,
properties or rights for the
purpose of generating revenues
for public purposes

5. PRINCIPLES AND
THEORIES OF TAXATION
1. The Benefit Principle
2. The Ability-to-Pay Principle
3. The Equal Distribution Principle

6. Structure of a Tax System
Proportional
Regressive
Progressive

7. SIGNIFICANCE OF TAXATION
Primary purpose: generate fund
to be used to defray expenses
incurred by the government in
promoting the general welfare of
its citizenry

8.  Other purposes:
1. to equitably contribute to the
wealth of the nation
2. to protect new industries
3. to protect local producers

9. CHARACTERISTICS OF TAXATION
1. It is enforced contribution.
2. It is generally payable in cash.
3. It is proportionate in character.
4. It is levied on person or property.

10. 5. It is levied by the state which has
jurisdiction over the person or
property.
6. It is levied by the law-making
body of the state.
7. It is levied for public purposes.

11. BASIC PRINCIPLES OF A
SOUND TAX SYSTEM
Fiscal adequacy
Equality or Theoretical Justice
Administrative Feasibility
Consistency or Compatibility with
Economic Goals

12. CLASSIFICATION OF TAXES
1. As to subject matter
 Personal, Poll or Capitation Tax
 Property Tax
 Excise Tax

13. 2. As to who bears the burden
 Direct Tax
 Indirect Tax
3. As to determination of account
 Specific Tax
 Ad Valorem Tax

14. 4. As to purpose
 General Tax
 Special Tax
5. As to scope
 National Tax
 Local Tax

15. DISTINCTION OF TAX
 Tax distinguished from Toll
 Tax distinguished from Penalty
 Tax distinguished from Debt

16.  Tax distinguished from other Terms
 Revenue
 Internal Revenue
 Customs Duties

17. ENTITIES EXEMPTED
FROM TAXATION
Religious Institutions
Charitable Institutions
Non-Profit, Non-Stock Educational Institutions
Non-profit Cemeteries
Government Institutions
Foreign Diplomats

18. DOUBLE TAXATION
Direct Duplicate Indirect Duplicate
Elements:
• Taxing twice
• By the same taxing authority
• Within the same taxing
jurisdiction
• For the same purpose
• In the same taxable period
• Involving the same purpose
Indirect duplicate taxation, on the
other hand, occurs when taxes on
the property are not imposed by
the same taxing authority. The local
and national governments imposed
taxes on the same property during
one taxable period. This kind of
imposition is legal.

19. FORMS OF ESCAPE FROM TAXATION
1. Shifting
 Forward Shifting
 Backward Shifting
 Onward Shifting
2. Capitalization
3. Transformation
4. Tax Evasion
5. Tax Avoidance
6. Tax exemption

20. FINANCE
 the management of large
amounts of money, especially by
governments or large companies
 provide funding for (a person or
enterprise)

21. FUND
 Appropriation
 Allotment
 Actual cash available

22. WHAT GOVERNS THE USE OF
GOVERNMENT FUNDS?
According to the provision of the
Philippines Constitution:
“No money shall be paid by the
Treasury except in pursuance of an
appropriation made by law.”
~ Art. VI, Sec. 29

23. NATIONAL BUDGET
It is the estimated schedule of
expenditures and sources of
financing.

24. GOV’T BUDGET
Financial plan of a
government for a given period
(usually for a fiscal year) which
shows what its resources are,
and how they will be
generated and used over the
given fiscal period

25. BUDGET PROGRAM
It is authorized under existing
appropriation measures
programmed to be spent during a
particular period.

26. EXPENDITURE PROGRAM
The expenditure program is that portion
of the national budget that refers to the
current operating expenditures (COE),
and capital outlays (CO), necessary for
the operation of the various government
departments and agencies.

27. FINANCING PROGRAM
The financing program includes the
projected revenues from both existing
and new measures. It also covers the
planned borrowings to finance budgetary
transactions and the payment of debt
principal falling due.

28. WHAT IS THE PURPOSE OF
A BUDGET?
 allocation function of the budget
 reflective of national government
priority programs
 serves a stabilization role
 a tool for the redistribution of the
country's financial resources

29. BASIC COMPONENTS OF
THE NATIONAL BUDGET
 Resources Side
 Revenues
 Borrowings
 Expenditures Side

30.  Primary source of financing the
budget
 The most stable source of fund
 Consists of: 1) Tax collection,
and 2) Non-Tax collections
REVENUE

31.  These are compulsory charges
imposed by the government on
goods, services, transactions,
individuals, firms and other
entities.
Tax Collection

32.  Arise from the sovereign power of
the state
 Comprise 87% of the government’s
major sources of revenues
Tax Collection

33. Non-Tax Collection
 Non-tax revenues include those collected in
exchange for direct services rendered by
government agencies to the public. They can
also arise from the government's regulatory
and investment activities.
 Non-tax sources make up 13% of the
government's revenues.

34. Non-tax revenues are
classified into:
 Fees and Charges
 Interests and Investments
 Sale of Assets
 Grants

35. BORROWINGS
Subcategories of borrowings:
domestic borrowings
foreign borrowings

36. WHY DO GOVERNMENTS
RESORT TO BORROWING?
1. augment revenues
2. cushion future needs while taking
advantage of favourable market
conditions
3. stabilize market
4. take advantage of long-term loans

37. EXPENDITURES
Expenditures are obligations that
the government incurs that must
be paid during or after the year
when they were incurred.

38. EXPENDITURES ARE CLASSIFIED
IN VARIOUS WAYS:
1. By expense class and object of
expenditures
2. By sector
3. By recipient entities
4. By region

39. EXPENSE
 Expense refers to the classification of
expenditures by the nature or type of
obligation.
 Four Expense Classes:
 Current Operating Expenditures (COE)
 Capital Outlays (CO)
 Net Lending
 Debt Amortization

40. BUDGET APPROPRIATION
 It is defined as an authorization
made by law, directing payment
out of government funds, under
specified conditions or for
specified purposes.
 The budget is authorized under
various appropriation laws.

41. APPROPRIATION LAWS
1. Annual Appropriations
2. Continuing Appropriations
3. Automatic Appropriations

42. ANNUAL APPROPRIATIONS
This is an authorization for
incurring obligations during a
specified budget year.

43. EXISTING
APPROPRIATIONS
Two types:
 Continuing appropriations
 Automatic appropriations

44. CONTINUING
APPROPRIATIONS
are those which have been previously
enacted by Congress and which
continue to remain valid and available
to support obligations for a specified
purpose or project.

45. AUTOMATICALLY APPROPRIATED ITEMS:
1. Debt Service
2. Net Lending
3. Retirement and Life Insurance
Premiums
4. Grants and Donations
5. Military Camp Sales Proceeds Funds

46. The sources of appropriations of the annual
budget are: 1) new general appropriations
legislated by Congress for every budget year
under the General Appropriations Act (GAA);
and 2) existing appropriations previously
authorized by Congress. To repeat, the
Constitution says that no money can be
withdrawn from the Treasury except in
pursuance of an appropriation made by law
(Sec. 29, Article VI, 1987 Constitution).

47. How are
government funds
appropriated?
DBM reviews and consolidates
proposed budget of all agencies
for inclusion in the president’s
proposed budget for submission
to congress
Agencies explain the details of
their proposals in separate
hearings called by the House of
Representatives and the Senate
for inclusion in the General
Appropriations Bill
The President signs the General
Appropriations Bill into law
(General Appropriations Act)
Individual agencies
prepare their estimates of
expenditures for the
succeeding year
Agencies justify details of their
proposed budgets

48. THE "ONE-FUND" CONCEPT
is the policy enunciated through PD No. 1177
which requires that all income and revenues
of the government must accrue to the
General Fund and thus can be freely
allocated to fund programs and projects of
government as prioritized.

49. Sources of
School Finance
and Funds

50. The State Responsibility
for the Support on Education
The welfare of the state depends
largely upon the education of its citizens.
The Congress has consistently
given approximately one third (1/3) of
the entire budget of the country to
education.

51. LEVELS OF GOVERNMENT
1. The National Government
2. The Provincial Government
3. The Municipal Government

52. Sources of government income
for education:
1. Taxes imposed by law for the support
of the government such as the real-
property tax, specific tax and import
and export taxes.

53. 2. Tuition fees imposed on students in
public high schools, vocational
schools, regional normal schools,
and chartered colleges and
universities such as the University of
the Philippines
3. Matriculation fees

54. 4. Rental for lease of school sites
and sales of school products
5. Land grants and donations
6. Voluntary contributions
7. Special fees

55. Support for
Elementary Education
Before the enactment of Commonwealth
Act No. 586 (Educational Act of 1940),
the elementary schools were jointly
supported by the National and the Local
government.

56. Educational Act of 1940
1. Support of all elementary schools
in municipalities and municipal
districts saved the situation for
the poor communities.

57. Educational Act of 1940
2. Abolished the share of municipalities
and municipal districts in the internal
revenue collections, percentage taxes
and income tax to the general fund
which may be drawn for school
purposes.

58. Educational Act of 1940
3. The law forbids the collection of tuition
fees in the intermediate grades although it
permits matriculation fees not exceeding for
each pupil enrolled in intermediate grades.
60% spent for the purchase of library books
and equipment and 40% for financing athletic
activities for intermediate grades.

59. Support for
Public Secondary Schools
 The financial support for the
maintenance and operation of
public ordinary schools is
provided for by the provincial and
city governments.

60. The Sources of Provincial Income
1. Internal revenue allotments from the
national government
2. Share from local taxes
3. Fees from services rendered
4. Income from miscellaneous receipts

61.  The major portion of the support
for secondary schools comes
from the tuition and matriculation
fees imposed by the Provincial
Board on all high school
students.

62.  Public secondary schools charge
a tuition fee of between Php80
and Php150 a year.

63.  Through the enactment of Republic
Act No. 3478, the National Government
has been granting annual national aid
to general provincial and municipal high
schools. The law authorized 10 million
for the purpose. This aid is primarily
intended for salary adjustments of
teachers and other secondary school
personnel.

64.  Voluntary contributions and donations
by private individuals constitute
additional sources of income.
 In the case of municipal high schools,
they are also supported from students’
tuition fees and general fund transfer
from the municipality where they are
located.

65.  Former superintendent of schools
Dr. Pedro T. Orata has advocated
the opening of barrio high
schools.
 According to Dr. Orata, there are
about 450 barrio high schools as
of July 1967.

66.  Sources of funds, the Bureau of
Public Schools in its Memorandum
No. 86, issued on August 01, 1966,
states as follows:
1. Tuition fee to be charged should
not be less than Php80 a year.

67. 2. 50% of the 10% real estates ta
proceeds allotted to barrios in
accordance with Revised
Barrio Charter should be set
aside and used for the
improvement of instruction in
the barrio high schools.

68. 3. All barrios should share the
expenses for the improvement of
instruction.
4. All resolutions of the barrio
councils regarding the funding of
barrio high schools should be
approved by the Municipal
Council concerned.

69. Support of Public Schools
in Chartered Cities
 Supported from tuition fees and
city funds
 Another source of income is the
national aide

70.  In R.A. No. 3478, the National
Aid is specifically for provincial
and municipal high schools but
the law was amended by R.A.
No. 4128 so as to include all
city high schools. The aid is
also primarily for salary
adjustments of teachers.

71. Support of
Vocational High Schools
 Vocational schools located in
provinces usually come under
two categories: 1) the provincial
trade school and 2) the provincial
agricultural school.

72.  All vocational schools must be
nationalized since the enactment
of R.A. No. 948 in 1954 the
sources of income now are
national contribution, tuition and
other fees an income from school
products.

73. Support of
Regional Normal Schools
 Regional normal schools are also
national like the vocational
schools.

74.  Sources of income are national
contribution and tuition fees.
 Regional normal schools are
therefore supported jointly by the
students themselves and by the
national, provincial and municipal
governments.

75. SUPPORT OF SPECIAL SCHOOLS
 The Philippine Nautical School in Pasay
City which offers courses for employment
as merchant marine officers is supported
entirely by the National Government. The
School for Deaf and Blind under the
Bureau of Public Schools is supported
almost entirely by the National
Government with occasionally aids from
the Philippine Charity Sweepstakes.

76. SUPPORT OF CHARTERED
GOVERNMENT COLLEGES
AND UNIVERSITIES
 Comes from the tuition and matriculation fees
of students and from national funds
appropriated annually by Congress.
 Special aids for the construction, repair and
improvement of buildings are given in special
legislation or taken from the pork barrel fund.

77. Expenditures of
Private Schools, Colleges
and Universities
The private schools, colleges and universities
spend most of their income for the salary of
the teaching staff, personnel and for the
maintenance of school buildings and premises
as well as the equipment, books and
references and other instructional materials.

78. Basic Principles in the
Administration of School Finance
1. Careful planning should precede the
expenditure of any public funds for
education.
2. The school support must be
determined by its nature.

79. 3. School funds should be used for the
accomplishment of educational aims
and objectives as provided in the
Constitution.
4. Public elementary schools should be
free to every child of school age.

80. 5. Sufficient school funds should
be made available to make
possible equalization of
educational opportunity
throughout the country.

81. 6. All citizens should realize that added
services in education is costly and it
therefore requires increased
revenue.

82. 7. School finances should be related to
the total national income and to the
amount of money spent for other
provincial, city or municipal projects.
8. School funds should be administered
wisely and economically.

83. Procedures Followed
in Financing Education
 Municipalities, municipal districts and cities do
not have to provide for elementary education by
virtue of Commonwealth Act No. 586 which
placed the responsibility of support for
elementary education on the National
Government.

84. The National Government has assumed the
greater burden of support for:
Elementary schools in the whole country
Regional normal schools, vocational schools,
specials schools and partially even provincial
secondary schools.
Chartered colleges and universities
The construction and repair and improvement of
school buildings remain the legal responsibilities
of provinces, municipalities and cities