GRADUATE SCHOOL
MASTER OF PUBLIC ADMINITRATION
MIDTERM EXAMINATION
Public Fiscal Policy & Financial Management
Direction. Answer the following questions as clearly and comprehensively as
possible. Everyone is to answer questions A to D and answer the latter
questions based on your section. Go through the matrix for grading your
answers to the questions.
Legibility – 4 points
Content and Substance – 10 points
Consistency of thought and ideas – 6 points
A. Public Financial Management & Fiscal Policy be explained without
including the concept of “Public Debt”? Why? Explain lengthily.
Answer: Public financial management and fiscal policy can be explained
without directly involving the concept of public debt. Here are the key aspects:
(del Mortel,T., Introduction, organization, realities, policies and goals of Local
Fiscal Administration, July 25, 2018, Diwa C Guinigundo, 2012. "Fiscal policy,
public debt management and government bond markets: the case for the
Philippines," BIS Papers, 2012, wong et,. Al, Macroeconomic Management
Programs and Policies, 19 Apr 2002, International Monetary Fund)
Public financial management” commonly describes elements of an annual
budget cycle, which typically centers around (1) budget formulation; (2) budget
execution; (3) accounting and reporting; and (4) external security and audit. A
general consensus exists around the objectives of the PFM system. Multiple
authors have framed the PFM system around achieving the objectives of
aggregate discipline, including allocation and operational efficiency. The
maintenance of aggregate fiscal discipline remains the first objective of a PFM
system and deals with the interaction between two variables: revenue and
expenditure. A PFM system should ensure that public resources remain
allocated to agreed-upon strategic priorities and spur reallocation from lesser
to higher priorities to ensure allocation efficiency. It should also ensure
operational efficiency by achieving maximum value for money in the delivery
of services.
Fiscal policy is the use of government spending and taxation to influence the
economy. Governments typically use fiscal policy to promote strong and
sustainable growth and reduce poverty. To influence economic conditions,
especially macroeconomic conditions. These include aggregate demand for
goods and services, employment, inflation, and economic growth.
During a recession, the government may lower tax rates or increase spending
to encourage demand and spur economic activity. Conversely, to combat
inflation, it may raise rates or cut spending to cool down the economy.
Fiscal policy is often contrasted with monetary policy, which is enacted by
central bankers and not elected government officials
Distinguish Public Financial Management from Public Fiscal Policy in
two ways.
Answer: Public Financial Management and Public Fiscal Policy are
interrelated but distinct concepts in the realm of public finance. Two ways to
distinguish between the two (What is the difference between fiscal policy and
public finance? | Homework.Study.com, Segal, T., Monetary Policy vs.
Fiscal Policy: What's the Difference?, Sep
2023 )
:
1. Scope and Focus: - Public Financial Management (PFM) focuses on the
efficient, effective, and transparent management of public financial
resources. It encompasses the processes and systems involved in
planning, budgeting, executing, accounting, reporting, and auditing the
government's financial activities. - Public Fiscal Policy (PFP), on the other
hand, is concerned with the broader objectives and strategies related to
government revenue, expenditure, and the overall management of the
public sector's fiscal position. It involves the formulation and
implementation of policies aimed at achieving macroeconomic goals, such
as economic growth, price stability, and employment.
2. Decision-making and Responsibilities: - Public Financial Management is
primarily focused on the operational and administrative aspects of
managing public funds. It involves the day-to-day decision-making and
implementation of financial processes within government agencies and
departments. - Public Fiscal Policy is a higher-level, strategic decision-
making process that involves the government's executive and legislative
branches. It encompasses the formulation and adoption of policies, laws,
and regulations that shape the overall fiscal environment and direction of
the country. while Public Financial Management deals with the practical
and operational aspects of managing public funds, Public Fiscal Policy is
concerned with the broader, strategic decisions and policies that govern
the government's revenue, expenditure, and overall fiscal position. The two
are interrelated, as the effectiveness of PFM can directly impact the
success of PFP in achieving macroeconomic objectives.:
B. Explain the concept of “Progressive Taxation”. Is this system a
legitimate process to tax individuals and corporations? Why? Justify.
State two (2) loopholes to a Progressive System of Taxation and
elucidate.
Answer: Progressive taxation means higher tax rates for those with higher
income or more wealth, so that those who earn or have more are taxed at a
higher rate. Personal income tax based on graduated scales where the tax
rate goes up as income level rises is probably the clearest example of
progressivity.Kagan, J., What Is a Progressive Tax? Advantages and
Disadvantages, November 29, 2023)
The concept of progressive taxation is a system where the tax rate increases
as the taxable income or wealth of an individual or corporation increases. This
means that people with higher incomes or greater wealth pay a higher
percentage of their income or wealth in taxes compared to those with lower
incomes or less wealth. On the pro side, a progressive tax system reduces
the tax burden on the people who can least afford to pay. That leaves more
money in the pockets of low-wage earners, who are likely to spend more of it
on essential goods and stimulate the economy in the process.
A progressive tax system also tends to collect more taxes than flat taxes or
regressive taxes, as the highest percentage of taxes is collected from those
with the highest amounts of money.
A progressive tax also results in those with the greatest amount of resources
funding a greater portion of the services that all citizens and businesses rely
on, such as road maintenance and public safety.
Progressive taxation is considered a legitimate to tax individuals and
corporations and widely accepted process for several reasons:
1. Equity and Fairness: Progressive taxation is seen as a more equitable and
fairer system of taxation, as it aligns with the principle of ability to pay. Those
with higher incomes or wealth can afford to contribute a larger share of their
income or wealth towards the financing of public goods and services.
2. Redistribution of Wealth: Progressive taxation can help to redistribute
wealth and income more evenly within a society. By taxing the wealthy at a
higher rate, the government can generate additional revenue that can be used
to fund social programs, infrastructure, and other public services that benefit
lower-income individuals and communities.
3. Economic Efficiency: Progressive taxation can promote economic efficiency
by reducing the tax burden on those with lower incomes, leaving them with
more disposable income to spend on goods and services, which can stimulate
economic growth.
4. Societal Cohesion: A progressive tax system can contribute to social
cohesion and a sense of shared responsibility, as citizens with higher incomes
or wealth recognize their role in supporting the broader public good. While
progressive taxation is a legitimate and widely accepted system,
two (2) loopholes to a Progressive System of Taxation Critics of
progressive taxes consider them to be a disincentive to success. They also
oppose the system as a means of income redistribution, which they believe
punishes the wealthy, upper class, and even the middle class, unfairly.
Opponents of the progressive tax generally are supporters of low taxes and
correspondingly minimal government services
1. Avoidance and Evasion: Individuals and corporations may attempt to avoid
or evade progressive taxation through legal or illegal means, such as
exploiting tax loopholes, using offshore tax havens, or engaging in tax
evasion.
2. Complexity and Loopholes: Progressive tax systems can be complex, with
various deductions, exemptions, and loopholes that may be exploited by those
with the resources and expertise to navigate the system. This can lead to
inequities and a lack of fairness in the overall tax burden.
c. The Budget Cycle is said to be part and parcel to good governance.
Which of the four-part budget cycle can be considered a least important
part? Why?
Answers: The four main stages of the budget cycle are:
1. Budget Formulation
2. Budget Approval
3. Budget Execution
4. Budget Evaluation and Audit
the four-part budget cycle can be considered a least important part
, it could be the Budget Evaluation and Audit stage.
.
1. Budget Evaluation and Audit: This stage involves reviewing the
performance of the budget, assessing the efficiency and effectiveness of
spending, and identifying areas for improvement. While important for
accountability and learning, one could argue that it is relatively less critical
compared to the other stages in the immediate term. The budget
formulation, approval, and execution stages are done well, the evaluation
and audit stage serve more as a feedback loop to improve future budget
cycles, rather than being a prerequisite for the current one. Additionally, the
evaluation and audit stage may be considered less important in the sense
that it is not directly responsible for the allocation and use of public funds,
which is the primary function of the other three stages. However, the
Budget Evaluation and Audit stage is still a crucial component of the overall
budget cycle and good governance. Neglecting this stage can lead to a
lack of accountability, missed opportunities for improvement, and potential
misuse of public resources. In summary, while the Budget Evaluation and
Audit stage is an important part of the budget cycle, it could be considered
relatively less important compared to the other three stages, which are
more directly responsible for the allocation and execution of public funds.
State three (3) reasons why the State of the Nation Address (SONA) of
the President is an important activity of the executive department.
What principle of governance can you relate “public accountability”
to and why?
Answer: The State of the Nation Address (SONA) by the President is
an important activity of the Executive department for the following
reasons:
1. Communicating the government's vision and priorities: The SONA
allows the President to articulate the administration's key policy
objectives, legislative agenda, and plans for the upcoming year. This
communication helps set the direction for the government and
informs the public, legislature, and other stakeholders about the
Executive's priorities.
2. Reporting on the state of the country: The SONA provides an
opportunity for the President to present an overview of the country's
economic, social, and political conditions. This report helps inform
the public and other branches of government about the progress
made, the challenges faced, and the overall state of the nation.
3. Promoting accountability and transparency: The SONA is a public
event that is widely covered by the media, allowing the President to
be held accountable for the government's performance and actions. It
also promotes transparency by giving the public access to the
President's report and plans.
Public Accountability and the Principle of Good Governance: The
principle of public accountability can be closely related to the
principle of good governance. Public accountability refers to the
responsibility of the government and its officials to answer to the
public for their actions and decisions. This principle of public
accountability can be linked to the broader principle of good
governance, which emphasizes the importance of transparency,
responsiveness, and the rule of law in the functioning of the
government. Good governance requires that the government be
accountable to the public for its actions and decisions, and that it
operates in a transparent manner.. The form of liability depends on the
type of organization concerned. All decision-makers, collective and
individual, take responsibility for their decisions. Decisions are reported on,
explained and can be sanctioned. (https://www.coe.int/en/web/good-
governance/12-principles,
https://www.atlantis-press.com/proceedings/icodag-17/25886136)
D. The President of the Federal Socialist Republic of the Filipini ordered
his Secretary of Tourism to close down all beaches in Paga-waan Island, a
premier beach province of the Republic. Because of this, Secretary
Bobong Tan-Ga of the Commission on Tourism was accused of grave
abuse of discretion by a private group of Travel agencies before the
Lupong Tagapamayapa in that Barangay.
Atty. Pekeng Talino heard of this and immediately informed his
compadre Senator Kura Kot to initiate ‘impeachment’ proceedings
against the Secretary. The unpopular and unschooled Senator
immediately filed an impeachment case against the Secretary before
the Senate of the Republic.
Questions:
D.1. Will the impeachment proceeding at the Senate prosper? Why?
Defend.
Answer: D.1. No, the impeachment proceeding at the Senate will not
prosper. The grounds for impeachment are limited to "culpable violation
of the Constitution, treason, bribery, graft and corruption, other high
crimes, or betrayal of public trust" as outlined in the Constitution. Mere
"grave abuse of discretion" by a Cabinet Secretary in the exercise of
their functions does not constitute an impeachable offense. The
President's order to the Secretary of Tourism to close down the beaches
in Paga-waan Island, even if questionable, is an exercise of executive
power and discretion. While the travel agencies may have a valid legal
action against the Secretary for abuse of discretion, this does not
necessarily rise to the level of an impeachable offense that would
warrant the Senate's intervention. The Constitution establishes a high
bar for impeachment, and the mere filing of an impeachment case by an
"unpopular and unschooled" Senator without proper grounds is unlikely
to succeed. The Senate, as the impeachment court, would likely dismiss
the case for lack of merit.
D.2. If Atty. Pekeng Talino filed the impeachment case before the
House of Representative against Secretary Bobong Tan-Ga on the
ground of “grave abuse of discretion amounting to excess or lack of
jurisdiction”, will the impeachment proceeding prosper? Why?
Elucidate.
Answer:
D.2. If Atty. Pekeng Talino filed the impeachment case before the House
of Representatives against Secretary Bobong Tan-Ga on the grounds of
"grave abuse of discretion amounting to excess or lack of jurisdiction,"
the impeachment proceeding may also not prosper. The grounds for
impeachment, as mentioned in the previous question, are limited to the
specific offenses outlined in the Constitution. "Grave abuse of
discretion"(
https://lawphil.net/judjuris/juri2022/mar2022/gr_211017_2022.html) is a
legal concept that refers to a situation where a government official acts
in a capricious, whimsical, or arbitrary manner, amounting to an excess
or lack of jurisdiction. While this may provide a basis for a legal
challenge against the Secretary's decision, it does not necessarily
constitute an impeachable offense. The House of Representatives, as
the body that initiates impeachment proceedings, would likely scrutinize
the case and determine whether the alleged actions of the Secretary
meet the high bar for impeachment. Unless there is evidence of other
impeachable offenses, such as corruption or betrayal of public trust, the
impeachment proceeding may not prosper, even if the House initially
accepts the case. The distinction between a legal challenge and an
impeachable offense is an important one, and the House would need to
carefully evaluate the grounds and evidence presented to determine the
appropriateness of impeachment proceedings.
