 Taxes are inevitable because we as citizens expect the government to provide us
with various goods and services
 For the government to perform economic wellbeing (), it needs to raise revenue
through taxation
 A Financial Overview of the US Government
 The Federal Government
 The Fiscal Challenge Ahead
 State and Local Government
 Taxes and Efficiency
 Marginal Tax Rates Versus Average Tax Rates
 Taxes and Equity
 Conclusion: The Trade-Off Between Equity and Efficiency
 Insert Figure 1
 Insert Table 1
 The Federal Government
 Collects 2/3 of the economy
 Table 2
 Individual Income Tax
 April 15
 To report all sources of income
 E.g. Wages from working, Interest on savings, Dividends from corporations in which it
owns shares, Profits from small business
 add
 Family’s Income Tax
 Not simply proportional to its income
 Taxable incomes
 Computed as total income minus an amount based on the number of dependents
(primarily children)
 INSERT TABLE 3
 ad
 Payroll Tax
 Tax on the wages that a firm pays its workers
 Corporate Income Tax
 Tax bases on profit of the corporation
 In essence, taxed twice
 Once when the corporation earns profits
 Twice by the individual income tax when the corporation uses its profits to pay dividends to its
shareholders
 add
 Other
 Excise taxes
 Estate Taxes
 Custom Duties
Payroll Tax
Tax on the wages that a frim pays its workers
Income Tax
ax Rate
The rate is 30% on net income but there are some preferential rates and exemptions. Preferential rates vary from 2 to 20%.
Regional headquarters are taxed at 10%.
Capital Gains Tax
These are taxed like income, except those from selling shares in companies (5-10% if not exchanged on the Stock
Exchange; half of 1% of the selling price otherwise), and those from selling real estate not used for business purposes (6%).
Deductions on dividends
Deduction of 15% on dividends paid by the Philippine company if the non resident's country
allows 20% tax credit, otherwise there is a deduction of 35%.
Deductions on interest
Deduction of 20%
Deductions on royalties
Deduction of 20%
Deductions on transfers from subsidiaries
Deduction of 15% of profits after tax paid by the subsidiary to the head office.
Property Tax
Varies according to the location, and does not exceed 3% of the estimated value.
Social contributions
Vary according to wages, maximum 1 090 PHP.
Stamp duties
Vary according to the type of document.
Tax on transfers of property
From 2 to 15%.
Other
Tax of 3 to 7% for certain activities such as banking, insurance, finance and transport.