Bsa 2-1

PHILIPPINE
FISCAL POLICY
GROUP 5
Nikole Baltazar – Researcher
Marjerie Garcia - Presenter
Patricia ann mempin - Researcher
Jerilene manzon –Graphic Artist
Nathaniel Sarmiento - Presenter
PHILIPPINE FISCAL POLICY
• One major function of the government is to
stabilize the economy (prevent
unemployment or inflation)
• Stabilization can be achieved in part by
manipulating the public budget-government
spending and tax collections-to increase
output and employment or to reduce
inflation.
FISCAL POLICY
• It is the use of government revenue collection (taxation) and
expenditure (spending) to influence the economy.
• It takes off to influence income and consumption and lead
the economy towards growth and development.

• It also has non-economic objectives which may conflict with

economic aims.
• used by the government to stimulate and depress the
economy.
 TYPES OF FISCAL
POLICY
The total level of government spending can be change to help increase and decrease
the output of the economy.
• Expansionary: This type of policy is usually undertaken during recessions to
increase the level of economic activity. In this instance, the government spends
more money than it collects in taxes.
• Contractionary: This type of policy is undertaken to pay down government debt
and to cap inflation. In this case, government spending is lower than tax revenue.

During contraction or recession, the government can do two things:

1. Decrease taxes
2. Increase spending.
DECREASE TAXES
1. Gives people more money to spend
2. More money = More demand
3. More demand = More production
4. More production = More jobs
5. More jobs = more demand and etc.

INCREASE
SPENDING
1. Increases demands for goods
2. More demand = More production
3. More production = More jobs
4. More jobs = More demands and etc.
 OBJECTIVES OF
FISCAL POLICY
1. Development by effective Mobilisation of Resources
2. Efficient allocation of Financial resources
3. Reduction in inequalities of income and wealth
4. Price stability and control of inflation
5. Employment generation
6. Capital formation
7. Development of infrastructure
 IMPORTANCE OF
FISCAL POLICY
• It can promote macroeconomic stability by
sustaining aggregate demand and private
sector incomes during an economic
downturn and by moderating economic
activity during periods of strong growth
 Challenges in implementing
Fiscal Policy
The government has two tools to implement its fiscal policy:

• Taxes
• Government spending

If the economy is in recession, the government may decide to increase

aggregate demand, or decrease taxes to stimulate the economy.
Similarly, if the economy is facing inflationary economic boom, it may
decrease spending or increase taxes.
How does Fiscal Policy affect?

Unfortunately, the effects of any fiscal policy are not the same for everyone. Tax cut
could affect the middle class in times of economic decline and rising taxation which is
typically the largest economic group.

Similarly, when a government decides to adjust its spending, its policy may affect a
specific group of people depends on the government expenditures and budgeting.
Effectiveness of Fiscal Policy
• Fiscal policy becomes effective when it produces the intended
result.

• Government employs the fiscal policy to influence the

Aggregate Demand (AD).

• Government makes intervention in the market where it is an

important tool to correct the market failure.

• Fiscal policy becomes also effective, when it increases the

economic efficiency.
 SOURCES
https://courses.lumenlearning.com/boundless-economics/chapter/introduction-to-fiscal-
policy/https://www.slideshare.net/chweetjerry/fiscal-ppt

https://courses.lumenlearning.com/boundless-economics/chapter/introduction-to-fiscal-
policy/

https://www.slideshare.net/chweetjerry/fiscal-ppt

https://www.slideshare.net/rbalsells/fiscal-policy-ppt

Department of Budget and Management

Bureau of Internal Revenue

https://www.academia.edu/13536335/Fiscal_Policy_in_the_Philippines
That's all for today,
folks!
Fingers crossed I'll be just as
productive tomorrow.