1. SOURCES OF FUNDS for theSOURCES OF FUNDS for the
National GovernmentNational Government

2. Sources of Funds:Sources of Funds:
1. Tax Revenues
2. Non-Tax Revenues such as
fees to be collected

3. 2) borrowings from both domestic
and foreign sources; and
3) withdrawals from available cash
balances

4. TaXTaX
A tax 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.

5. Tax revenues include the following:Tax revenues include the following:
 Income taxes -
Individuals
Corporations
Miscellaneous
 Property taxes -
Real property
Property transfers
Special assessments
Special education tax
Stock transfers
Miscellaneous
 Taxes on goods and services -
Excises on imports
Excises on domestic articles
Business taxes and licenses
Franchise tax
Motor vehicle taxes
Miscellaneous

6.  Taxes on international trade and transactions -
Import duties
Export and premium duties
Foreign exchange
Miscellaneous
 Other taxes -
Documentary stamp taxes
Charges on forest products
Wharfage fees and charges
Immigration tax
Mining tax
Community tax
Miscellaneous - Local Government Shares on
on Internal Revenue Collections
Miscellaneous - Local Government Shares in the Proceeds from
the Development and Utilization of the National Wealth
Miscellaneous

7. non-tax revenues are the following:non-tax revenues are the following:
 Operating and service income -
Government services
Government business operations
Interests
Commissions
Insurance/fiduciary bond premiums
Rents
Trading/production
Miscellaneous

8. Income from public enterprises/investments -
Interest on loans
Dividends on stocks
Interest on bonds
Interest on treasury notes/bills
Interest on promissory notes
Interest on receivables, acceptances and discounted
notes
Gain on sale of acquired assets/stocks/bonds
Royalties
Government share from toll fees and casino earnings
Miscellaneous

9.  Miscellaneous income -
Sale of goods/merchandise confiscated
Sale of scrap construction materials
Gain on foreign exchange
Contributions
Inventory adjustments
Sweepstakes
Sale of waste materials
Miscellaneous

10. Sale of Assets -
Public domain
Fixed assets
Gain on sale of fixed assets
Scrap of fixed assets
Intangible assets
Investments/stocks/bonds
Gain on sale of investments/stocks/bonds
Grants and aids -
From foreign countries
From other levels of governments
Domestic

11. What are the desirable features of aWhat are the desirable features of a
tax system?tax system?
A tax system should be revenue-
productive;
simple and easy to administer,
equitable, and
progressive.

12. What are the government's current efforts toWhat are the government's current efforts to
improve tax collections?improve tax collections?
The national government has continuously expended
an all-out effort to strengthen its revenue-generating
capability through legislative and administrative
reforms.
Recently, the government came up with a
comprehensive measure to overhaul the tax system
to bring in badly needed revenues for the
government.
Called the Comprehensive Tax Reform Program
(CTRP), the new tax measure has three principal
components, namely, a) income tax reform; b) excise
tax reform; and, c) fiscal incentives reform.
The CTRP aims to widen the tax base, simplify the
tax structure to minimize leakages, undeclared
revenues, overstated deductions and corruption to
make the system more elastic and easier to
administer.

13. BorrowingsBorrowings
Borrowings refer to 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.
The government borrows to provide for the
requirements of capital projects and to support
priority programs and projects. Relying solely on
domestic resources will limit government’s
capability to provide the needed support.
Domestic resources is insufficient to finance
priority programs and projects.

14. domestic borrowings & foreigndomestic borrowings & foreign
borrowingsborrowings
Domestic borrowings are funds obtained from sources
within the country.
Domestic borrowings of the national government
are usually made through the auction of treasury
bills, notes and bonds to the public. Foreign
borrowings, on the other hand, are funds obtained
from sources outside the country, such as Asian
Development Bank (ADB), International Bank for
Reconstruction Development (IBRD), Overseas
Economic Cooperation Fund (OECF), etc.
Foreign borrowings can be obtained through loans
secured from foreign financial institutions or
through the flotation of government securities in
the international market.

15. Why does the government borrow?Why does the government borrow?
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

16. What are constructive cashWhat are constructive cash
receipts?receipts?
Constructive cash receipts are foreign
loan proceeds in the form of goods and
services for which no cash is remitted to
the national treasury. Such goods or
services have been paid directly by the
lender to the supplier.

17. DIMENSIONS OF THEDIMENSIONS OF THE
BUDGETBUDGET

18. The budget possesses various dimensions.
It can be classified according to the
following: By Sector, By Cost Structure,
By Expense Class and By Object, By
Region, By Type of Appropriation.

19. A. By SectorA. By Sector
The budget contains various type of
expenditures. They are for:
1. Social Services Expenditure;
2. Economic Services Expenditure;
3. Defense Expenditure;
4. General Public Services; and
5. Debt Burden

20. B. By Cost StructureB. By Cost Structure
1. For General Administration & Support Services
or Overhead Expenses
2. As Support to Operations for the facilitative
functions and services, staff and technical
support
3. For Operations of regular activities addressing
agency mandate
Example: Production of goods, delivery of pubic
services, and regulation, etc.
4. For Projects such as homogenous group of
activities that result in the accomplishment of
identifiable output within a designated period,
whether foreign or locally funded

21. C. By Expense Class & By ObjectC. By Expense Class & By Object
1. Current Operating Expenditures for
personal services, maintenance and
other operative expenses (MOOE)
2. Capital Outlays for investments, loans,
livestock and crops, land/land
improvements, buildings/structures,
furniture/fixtures

22. D. By Major Recipient ofD. By Major Recipient of
GovernmentGovernment
The major recipients of the budget are:

23. 1. The NGAs (National Government Agencies)
– they include all agencies with the Executive,
Legislative and Judicial Branches of
government
2. The LGUs (Local Government Units) –
funding is released in the form of IRAs
(Internal Revenue Allotments), special shares
in national proceeds, credit thru the MDF
(municipal development fund), and premium
subsidies for local insurance

24. 3. The GOCCs (Government Owned
and Controlled Corporations) – funding
is through subsidies, equity and net
lending

25. E. By Regional AllocationE. By Regional Allocation
The Budget is apportioned for each of
the various regions of the country.

26. F. By Type of AppropriationF. By Type of Appropriation
The budget is further classified into
different types, namely:
1. General Appropriations
2. Supplemental Appropriations

27. 3. Continuing Appropriations
◦ refer to appropriations available to support obligations for a specified
purpose or project, such as multi-year construction projects which
require the incurrence of obligations even beyond the budget year.
Examples of continuing appropriations are those from existing laws
such as : RA 8150, otherwise known as the Public Works Act of
1995; and Republic Act No. 6657 and Republic Act 8532 which set
funds specifically for the Agrarian Reform Program (ARP). Currently,
appropriations for capital outlays and maintenance and other
operating expenses are considered as continuing appropriations but
only for a period of 2 years.
4. Automatic Appropriations
◦ debt service-interest payments, the Internal Revenue Allotment or
IRA which is the share of local government units (LGUs) from national
government revenue and the Retirement and Life Insurance
Premiums (RLIP) which is the share of the national government in the
premium payments to GSIS for the life insurance and retirement
benefit fund of government employees.

28. The budget may increase or decrease
depending on the government’s policy of
how much it will infuse into the economy.
Maturing of a country’s debt determines
the size of the budget.

29. Obligations Budget vs. Cash BudgetObligations Budget vs. Cash Budget
Obligations budget are for expenditures
incurred for the year and is to be paid in
said year. This can also be for expenditures
incurred for the year to be paid next year.
Aside from this, it is also allocated for
interest payments.
Cash budgets are for expenditures incurred
for next year. It can also be allocated for
expenditures in previous years, and is also
allocated for interest payments.

30. Priority Development Priority Development
Assistance Fund (PDAF)Assistance Fund (PDAF)

31. PDAFPDAF
The Priority Development Assistance Fund
is a lump-sum appropriation
in the annual General Appropriations Act
to fund the priority development
programs and projects of the government
.

32. PDAFPDAF
is used to finance priority development
programs and projects identified by the
Members of Congress

33. For the LGU, the amount is released to
the Department of Budget and
Management as the fund administrator,
which in turn releases the corresponding
amount to the LGU beneficiary of the
programs and projects chosen by the
legislator

35. How Pork Barrel is createdHow Pork Barrel is created

36. How Pork Barrel is createdHow Pork Barrel is created
Step 1: PREPARATION
Budget Call Out
◦ The Executive calls out all government agencies and
departments to submit a budget for the next year
◦ Departments and their line agencies submits their
budget
◦ Setting of overall budget policy
◦ Agency-level budget formulation
◦ Executive review, deliberation and approval
◦ Preparation of budget documents and submission to
Congress

37. Step 2: Authorization:
◦ Prepared budget is transmitted to Legislative
Department for review and approval
◦ A Bicameral Committee Conference will be
held
At this point, Members of the House of
Representatives insert some PDAF line items and
intelligence funds to some departments and
agencies
Approval of the Budget (General Appropriations
Act)

38. Step 3: BUDGET EXECUTION
◦ The GAA serves as the legal basis which allows
for the use of funds from the national treasury
for specified expenditure items provided therein.
However, the existence of a GAA alone does not
imply that agencies can start utilizing and drawing
funds to finance their programs and activities.
Agencies need to secure an allotment to be able
to obligate amounts specified in their budgets;
cash allocation should also be secured before
disbursements can be made to settle these
obligations. The budget execution phase is
concerned with these operational aspects of
budgeting which facilitates the translation of
appropriations to disbursements, or more
specifically the release of funds through
allotments and Notice of Cash Allocation (NCA).