PUBLIC FINANCE

I. Introduction

Economics is relevant. It is a part of everybody’s life. Nobody can ignore the important role it plays in our everyday life. Economics means a lot of things to many people. We will be able to develop a systematic way of analyzing the consequences of human behavior where economic resources are concerned. With the skills we learned, we will be able to understand and explain how the country’s economic work. Through the interview we conducted, we will be able to know if it is possible to have a stable and progressive economy without government’s involvement or if the citizens will benefit more if the government intervenes with the economic activities.

As we go further on this study, we will deal with economic problems and issues that directly affect our lives. If we have a closer look in our society, we see a variety of problems which are interrelated. In spite of the advances in science and technology, knowledge and skills that man has developed and country’s wealth and resources, problems still persist. We study economics because we want to know how we can make our standard of living better in next generations to come than what we have now. As members in this community, we want to know how our community will progress and how we can contribute and benefit from that development. The strength of the community is important to us. As citizens, we have to be concerned in our country’s economic status.

Economics is everybody’s concern. It seeks to help men in his pursuit to meet his basic necessities and to improve his standard of living. Its study hopes to instill values which will contribute to development and hasten the fulfillment of our dream of achieving newly industrialized status. Do you think it would be possible to the economy to be stable and progressive without government involvement? The public sector has increased its influence on the economy by exercising the economic functions of the government. It is composed of people working in the government who are privileged to control and decide for economic purposes. We face many issues and challenges. We, the youth, can contribute to the development of our country and give importance to it.

II. Definition of Terms

1. Monetary Policy - regulate money through credit and banking system in order to attain monetary stability conducive to economic development

2. Fiscal Policy - concerns itself with the manipulation of the inflows (government spending) and outflows (taxes)

3. Taxation - supreme power of a sovereign state to impose burdens or charges upon persons, property or property rights for public purpose

- also regulates the flow of income in our economic system

-Two ways how tax is collected:

a. Direct – asked or collected directly from the people

b. Indirect – added on the goods and services

4. Bangko Sentral ng Pilipinas - implements monetary policy

5. Taxes, Non taxes and Borrowings are sources of government funds.

6. Current operating expenditure is an ongoing cost for running a product, business or system

7. Capital Outlay is the proposed budget.

8. Government spending improves the economy and assists raising level of economic activities.

III. Body

Public finance is defined by “Economics for Philippine High Schools” by Erlinda S. Santos and company as one aspect of economics that is vital in the day-to-day management of government. All activities of government such as administrative operation, provision of public services and maintenance of diplomatic relations require funding. It is therefore, necessary for governments or nations to maintain an efficient and stable financial condition. It includes economic policies that concern the government and the citizens. Barangays are the smallest communities in our country. If the national government applies economic policies, so does the barangay. According to the brgy. secretary of Brgy. Marvel, Isabel, Leyte, the one of the policies implemented in the locality is the monetary policy. Monetary policy is applied by basing their projects to the budget they have. Taking a very important role in this policy is the Bangko Sentral ng Pilipinas. It is a safe depository of public funds. The brgy. treasurer deposits money to the Land Bank. They use the money for canvassing, providing office supply and setting of resolution.

The barangay’s circulation of money is not as complicated as the nation’s. As we see, inflation rate is getting higher. The barangay is a small community so it is not a problem to properly circulate money to avoid this. Furthermore, the barangay is under a municipality. Money goes directly to the municipal hall because it is a very small town. Another policy implemented in the barangay is the fiscal policy. It is applied in the barangay by having 1.4 million peso budget from the government where 20% of it is for development, 10% of it is for the Sangguniang Kabataan, and 5% for Calamity Fund. Here, taxes will always be involved. Brgy. Marvel issues tax revenues like the sedula and barangay clearance. They collect taxes from the registered and non-registered residents in the barangay for clearance, summon, and certification.

For a very small barangay, they have a big budget. 20% or Php 280,000 of their budget is to be used for the development of the barangay. This money should be used for projects and that people can benefit from them. Taxes are charges upon a persons, property or property rights for public purpose. Taxes are very important since it can help the national government, the local government and for the development of the barangay itself. The taxes are directly paid to the municipality, not to the barangay. The municipality shares equally the taxes collected to the different barangays of Isabel. There are many activities done in the locality. One is government spending. When you say fiscal policy, it is concerned with government spending. The barangay’s process of government spending is limited because they base the expenditures to what they have canvassed and then choose resources with good quality. In this case, the barangay does the spending. Another is taxation. It is where the barangay imposes 2%VAT and 3% for other taxes and it is deducted in expenditures. Their current operating expenditure is the ongoing Mahayahay pathway worth Php 175, 000. The capital outlay is the Php 100, 000 worth Can-isko pathway. The barangay has sources of government funds. It comes from the Financial Aid, International Revenue Allotment (IRA), Real Property Tax (RPT) from the Municipality, Financial Assistance from Governor and shares. The purpose of having a Census done by the National Statistics Office is for the national budgeting. This is where the barangays are included. The budget given to the barangay is used for the ongoing pathways.

Actvities are done thru applying these processes. Government spending is the process of allocating money for the public. Our respondents did not clearly state its importance in the economy. On the other hand, taxation, as said in previous data, is not collected by the barangay, but the municipality itself. Still, they use taxes for projects like pathways. The barangay has ongoing projects like the two pathways. It is a good idea to have these projects because it is needed by the people. With all these sources of government funds, it is understood that there is quite a big budget for the barangay. It is just the matter of using the money for the people, excluding the projects, should be known. Shortage is the lack of resources for a certain project. It is being experienced by this barangay. If there is shortage in the budget, the projects are paid thru installment basis and the barangay will have a low income.

Anything will not be complete without certain problems. For Brgy. Marvel, it experiences a problem that encompasses all. It is a difficulty which is common in a community. Data on the barangay expenditures were not shown to prove that it has shortage of money. Moreover, the barangay has a big budget even if it is a very small community. Privatization of these companies is either an effective plan of action or just a mere act to be ignored. Efficiency of the companies relies on the management.

There are so many companies owned by the government. A company runs depending on the system the management uses on it. What the officials said was true. Privatization of companies will affect the community depending on the administration. Our country is not affected by the Global economic crisis but with a corrupt government, the economy will not progress.

As we have noticed, there is a Global Economic Crisis. The economy of the United States of America (USA) has made a great impact on other countries closely related to it. Philippines, a known ally of this economic superpower, is not affected by the weak economy of the world. This country is fortunate not to be affected by a great impact; but still, the economy does not progress because the government is corrupt.

IV. Conclusion

The economy of a country is its heart. It keeps the country intact thru certain policies that keep it alive. Without a progressive economy, a country will never stand. Hand-in-hand with the citizens, the government implements these policies in order to survive. The government’s role in the economy is a very vital one. The government spearheads the development of the country. It controls the money or the government funds. It is a very important factor in circulating the money. It is not possible for the economy to progress without the help of the government. A community is progressive when we could see projects that have been successful. The people in the community could benefit from them. With the help of the citizens, the government leads the country to an economic breakthrough that we, Filipinos, have always asked for.

copyright @ 2009

zdgorres. economics teacher