Notesale: Turn your study into money

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FISCAL
MANAGEMENT
(CLASS LECTURES)

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MEANING OF PUBLIC AND
PRIVATE MANAGEMENT

It’s become a cliché that government would be better if it were run by private-sector
managers using standard business practices
...

Public management entails dealing with and/ or controlling the needs and interests of ‘the
whole’, which is in many cases the nation
...

This difference in scope constitutes the first and fundamental distinction between public
and private management, from which a number of differences arise
...
The difference between private and public sector values
Public management values public interest, public needs and political compromise
...
You Endeavour to
balance the needs of businesses, interest groups and individuals
...
As a private or business
manager, your first concern is the survival and economic success of your business
...
Public and voluntary sector objectives

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Naturally, the different values of public and private management dictate different
objectives and definitions of success
...
The broader
implications for competitors, customers and suppliers are not considered in the narrow equation
for business efficiency
...
That is because in the public sector, goals apply to a much
broader jurisdiction than a single business
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3
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However, organizational commitment
(the bond employees experience with their organization) is usually weaker in the public sector
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The private sector operates without the checks and balances of the public sector
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Their focus can therefore remain on maximizing the bottom-line
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Responding to crisis situations
Private firms are exposed to cross-cutting pressures from interest groups in the
communities in which they operate
...
But as a result of their broad societal mandate, public agencies are least insulated

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from external events
...

5
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Public management follows strict procedural rules instated to ensure that power is not
abused and the nation is well looked after
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While in private management, it is the
individuals with a lot of responsibility that also call the shots
...
Performance management challenges in the public sector
In private firms, management relies a great deal on incentives and perks that encourage
high performance
...

In the public sector, however, limits are applied to awarding high performance
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FISCAL MANAGEMENT:
MEANING AND IMPORTANCE

Fiscal management involves the planning, directing and controlling of financial resources,
whether for a private company or public agency
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What is the importance of Fiscal Management to education?
Fiscal management practices should support the provision of high quality learning
environments, opportunities, and experiences that recognize the needs of individual students and
work toward the attainment of high levels of achievement for all students
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Individuals pursuing careers in fiscal
management should understand how it improves the efficiency of financial operations in the public
sector as well as in business
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Fiscal management is the process of keeping an organization running efficiently within its
allotted budget
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They manage
routine activities, lay out future visions, and provide instructional leadership
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They may direct programming,
hire and supervise staff, manage budgets, and make decisions that affect the academic community
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The actual specific job functions for an education administrator will vary depending on the
institution of employment
...
For private schools and businesses, the job may be as a director of programs or head
master
...
For
colleges and universities, education administrators are employed at all levels of the management
structure — as admissions officers, department heads, and as deans and provosts
...
They act as a supervisor for managers and support
other faculty, such as librarians, coaches, teachers, and aids
...
At larger institutions,

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such as universities or large school systems, several administrators share the workload, each
having a specific responsibility
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Taxes are levied in almost every country of the world, primarily to raise revenue for government
expenditures, although they serve other purposes as well
...
For further discussion of taxation’s role in fiscal policy, see government
economic policy
...

In modern economies taxes are the most important source of governmental revenue
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e
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While taxes are presumably collected
for the welfare of taxpayers as a whole, the individual taxpayer’s liability is independent of any
specific benefit received
...
Because of the
likely link between taxes paid and benefits received, payroll taxes are sometimes called
“contributions” (as in the United States)
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In The Wealth of Nations (Book V, chapter
2) he set down four general canons:
I
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II
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The
time of payment, the manner of payment, the quantity to be paid, ought all to be clear and plain to
the contributor, and to every other person
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Every tax ought to be levied at the time, or in the manner, in which it is most likely to
be convenient for the contributor to pay it
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Every tax ought to be so contrived as both to take out and keep out of the pockets of
the people as little as possible over and above what it brings into the public treasury of the state
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From the first can be derived some leading views about what is fair in the distribution
of tax burdens among taxpayers
...
The fourth of Smith’s canons can be
interpreted to underlie the emphasis many economists place on a tax system that does not interfere

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with market decision making, as well as the more obvious need to avoid complexity and
corruption
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What follows is a discussion of some of the leading principles that can shape decisions about
taxation
...
In practice this equality
principle is often disregarded, both intentionally and unintentionally
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g
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Debate over tax reform has often centered on whether deviations from
“equal treatment of equals” are justified
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The most suitable taxes from this standpoint are personal levies (income, net worth,
consumption, and inheritance taxes)
...
There have, however, been important dissenters from this view,

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including the 17th-century English philosophers John Locke and Thomas Hobbes and a number
of present-day tax specialists
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e
...
e
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Some
theorists believe that wealth provides a good measure of ability to pay because assets imply some
degree of satisfaction (power) and tax capacity, even if (as in the case of an art collection) they
generate no tangible income
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If this principle could be implemented, the allocation of resources through
the public sector would respond directly to consumer wishes
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Although there are many examples to the contrary, economists generally believe that markets do
a fairly good job in making economic decisions about such choices as consumption, production,
and financing
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That is, taxation should entail a minimum of
interference with individual decisions
...
This does not mean, of course, that major social and economic goals may not
take precedence over these considerations
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Ease of Administration and Compliance
In discussing the general principles of taxation, one must not lose sight of the fact that taxes
must be administered by an accountable authority
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Administrative considerations are especially important in developing countries,
where illiteracy, lack of commercial markets, absence of books of account, and inadequate
administrative resources may hinder both compliance and administration
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Clarity
Tax laws and regulations must be comprehensible to the taxpayer; they must be as simple
as possible (given other goals of tax policy) as well as unambiguous and certain—both to the
taxpayer and to the tax administrator
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This not only
results in a considerable amount of error but also undermines honesty and respect for the law and
tends to discriminate against the ignorant and the poor, who cannot take advantage of the various

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legal tax-saving opportunities that are available to the educated and the affluent
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Stability
Tax laws should be changed seldom, and, when changes are made, they should be carried
out in the context of a general and systematic tax reform, with adequate provisions for fair and
orderly transition
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Cost-effectiveness
The costs of assessing, collecting, and controlling taxes should be kept to the lowest level
consistent with other goals of taxation
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Clearly, equity and economic
rationality should not be sacrificed for the sake of cost considerations
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Governments often allow the payment of large tax
liabilities in installments and set generous time limits for completing returns
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But we can group them into two
basic types, namely, national taxes and local taxes
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Our national taxation is based on the National
Internal Revenue Code of 1997 or the Republic Act No
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The import and export tariffs levied by the Bureau of Customs under
Republic Act No
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On the other hand, the local government taxation in the Philippines are based on Republic
Act 7160 or otherwise known as the Local Government Code of 1991, as amended
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Business owners, professionals, employees, consumers, and every taxpayer should be
aware of the different kinds of taxes in the Philippines
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Documentary Stamp Tax – is a tax on documents, instruments, loan agreements and papers
evidencing the acceptance, assignment, sale or transfer of an obligation, rights, or property
incident thereto
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Donor’s Tax – is a tax on a donation or gift, and is imposed on the gratuitous transfer of
property between two or more persons who are living at the time of the transfer
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Estate Tax – is a tax on the right of the deceased person to transmit his/her estate to his/her
lawful heirs and beneficiaries at the time of death and on certain transfers which are made by
law as equivalent to testamentary disposition
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Income Tax – is a tax on all yearly profits arising from property, profession, trades or offices
or as a tax on a person’s income, emoluments, profits and the like
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And instead
of filing quarterly income tax on the fourth quarter, they file and pay their annual income tax
return for the taxable year
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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 whose gross annual sales or receipts do
not exceed the amount required to register as VAT-registered taxpayers
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They are usually paid monthly by businesses or professionals
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Value Added Tax – is a business tax imposed and collected from the seller in the course of
trade or business on every sale of properties (real or personal) lease of goods or properties (real
or personal) or vendors of services
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VAT returns are usually filed and paid monthly and quarterly
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It is also imposed on things that are
imported
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This tax is what employers withheld in their employees’ compensation
income and remit to the government through the BIR or authorized accrediting agent
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Examples of the expanded withholding taxes are those that are withheld on rental income and
professional income
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Income
Tax withheld constitutes the full and final payment of the Income Tax due from the payee on
the said income
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Withholding Tax on Government Money Payments – is the withholding tax withheld by
government offices and instrumentalities, including government-owned or -controlled

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corporations and local government units, before making any payments to private individuals,
corporations, partnerships and/or associations
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Tax on Business of Printing and Publication – tax on the business of persons engaged in the
printing and/or publication of books, cards, posters, leaflets, handbills, certificates, receipts,
pamphlets, and others of similar nature
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Tax on Sand, Gravel and Other Quarry Resources – tax imposed on ordinary stones, sand,
gravel, earth, and other quarry resources, as defined under the National Internal Revenue Code,
as amended, extracted from public lands or from the beds of seas, lakes, rivers, streams, creeks,
and other public waters within its territorial jurisdiction
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Amusement Tax – tax collected from the proprietors, lessees, or operators of theaters, cinemas,
concert halls, circuses, boxing stadia, and other places of amusement
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Tax on Business – taxes imposed by cities, municipalities on businesses before they will be
issued a business license or permit to start operations based on the schedule of rates prescribed
by the local government code, as amended
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This is usually what businesses pay to get their Business Mayor’s Permit
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Fishery Rentals, Fees and Charges – rentals, fees or charges imposed by the municipality/city
to grantees of fishery privileges in the municipal/city waters, e
...
, fishery privileges to erect
fish corrals, oysters, mussels or other aquatic beds or bangus fry areas and others as mentioned
in the local government code, as amended
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00) or more, or who is required by law to file an income tax return
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Taxes that may be levied by the barangays on stores or retailers with fixed business
establishments with gross sales of receipts of the preceding calendar year of Fifty thousand

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pesos (P50,000
...
00) or less,
in the case of municipalities, at a rate not exceeding one percent (1%) on such gross sales or
receipts
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Barangay Clearance – a reasonable fee collected by barangays upon issuance of barangay
clearance – a document required for many government transactions, such as when applying for
business permit with the city or municipality

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