The issues and challenges in taxation in the digital economy stem from the complex and multifaceted nature of the digital economy. Reaching a common understanding and measurement of its size and impact is critical in devising a tax regime for the digital economy. In APEC Secretariat (2019), the Philippines identified the major barriers and challenges (i.e., scoping and measurement of the digital economy, the regulatory and legal framework - including sandboxes and digital infrastructure gap) to implementing structural reforms relating to the digital economy. It also identified the major policy gaps in terms of its regulatory and legal framework, competition policy, internet infrastructure improvements, and consumer education on digital economy. The opportunities and challenges that the digital economy brings are particularly important for developing countries, including the Philippines. Thus, it is deemed critical for the Philippine government to eliminate the barriers and challenges and address the identified policy gaps to fully reap the benefits from the digital economy. Also, the need for development strategies cannot be overemphasized. This paper argues that development strategies should first focus on developing domestic digital capacities.
The study analyzes the efficiency implications of fiscal decentralization using stochastic frontier analysis (SFA). It uses LGU health expenditure (in per capita real terms) as input. The output variables of interest include access to safe water and sanitation, health facility-based delivery, and access to hospital inpatient services. It also uses LGU income and its major components (i.e., own-source revenue and IRA, in per capita real terms) as covariates; as well as the health expenditure decentralization ratio to account for fiscal autonomy on the expenditure side and two measures of fiscal decentralization to account for financial/fiscal autonomy of the local government units (LGUs) on the income side (i.e., the ratio of LGU own-source revenue to LGU expenditures and ratio of LGU own-source revenue to LGU income) as factors affecting efficiency. The findings of SFA lend empirical evidences to what the literature says about the health devolution experience in the country. Issues on mismatch between local government fiscal capacity and devolved functions, fragmentation of health system, existence of two-track delivery system, and unclear expenditure assignments, among others inevitably create inefficiency. These issues should be addressed to fully reap the potential benefits (e.g., efficiency gains) from fiscal decentralization, particularly health devolution.
More than 25 years into the implementation of the Local Government Code of 1991, it is inconclusive whether fiscal decentralization indeed improves health service delivery in the Philippines. There is lack of studies that employ rigorous quantitative approach to address the research issue at hand. In this regard, the study attempts to contribute to the small body of literature and motivate further research and generation of reliable data that are crucial for evidence-based/informed policymaking. In particular, the study proposes an analytical framework that examines the effects of fiscal decentralization on health service delivery using difference-in-differences (DID) method. It draws up the standard measure of the extent/degree of fiscal decentralization affecting the health sector. Such endeavor is the first ever attempt to measure the extent/degree of health devolution in the Philippines, i.e., in terms of the health expenditure decentralization ratio. The output variables of interest include access to safe water and sanitation, health facility-based delivery, and access to hospital inpatient services. The control variables include two measures of fiscal decentralization to account for financial/fiscal autonomy of the local government units (LGUs) on the income side (i.e., the ratio of LGU own-source revenue to LGU expenditures and ratio of LGU own-source revenue to LGU income); LGU health spending as a proportion of total LGU expenditures; and per capita LGU income. The choice of variables was constrained by unavailability of disaggregated data at the LGU level. [.]
The Philippines has been badly affected by the coronavirus disease pandemic. In this light, the analysis of the 2021 President's Budget determines how the pandemic shaped the budgetary distribution of government's limited financial resources with focus on the top six departments/recipients for fiscal year (FY) 2021. It shows the high spending priority given to social and economic services which is consistent with the policy pronouncements of the government for FY 2021. The government's greatest priority for FY 2021 is to sustain and strengthen government efforts in responding to and recovering from the pandemic. Nevertheless, the emphasis on these spending priorities in the 2021 President's Budget Message creates an expectation that DOH and DSWD will rank much higher in the top 10 departments/recipients for FY 2021. Apparently, the 2021 proposed budget gives higher spending priority on maintenance of peace and order and national defense, which placed the Department of Interior and Local Government and the Department of National Defense in higher spots compared to the Department of Health and the Department of Social Welfare and Development. A close examination of various government documents (e.g., DBM 2020e) indicates that the proposed budget for the National Task Force to End Local Communist Armed Conflict (NTF-ELCAC) is part of the government's recovery program to adapt to the post-pandemic life.
The government budget reflects the government's spending priorities. It is deemed important to assess whether the priorities as outlined in the proposed 2020 President's Budget are consistent with the policy pronouncements of the current administration. In this light, the study examines whether budget allocation is consistent with the priorities that the government identified in its various policy pronouncements. It also evaluates the overall fiscal picture as projected in the proposed budget and its consistency with the macroeconomic assumptions. In addition, it examines the national revenue program, which together with the national expenditure program indicates the overall fiscal health in the 2020. The budget analysis indicates the high spending priority given to social services sector and economic services sector that is consistent with the policy pronouncements of the government. Nevertheless, the budget cut in the health sector needs further inquiry.
The short note on the 2019 President's Budget attempts to assess the proposed shift from obligation-based to cash-based budgeting and its implications on the 2019 proposed national budget. In the process, it aims to inform policy deliberations on Senate Bill 1761 (formerly Senate Bill 1450), otherwise known as the Budget Reform Bill, by discussing the concept of cash-based budgeting with focus on its advantages and disadvantages and also, its implications on the 2019 proposed national budget and on government operations and practices. It also examines the past disbursement performance of the national government as well as the factors affecting their performance. The note argues for the need to reconsider DBM's initiative to shift from obligation-based to annual cash-based budget scheme in view of the perennial issues that government agencies/units have been facing.
The study attempts to document the Philippine's experience in health devolution with focus on the Department of Health's efforts to make it work. It also aims to draw lessons and insights that are critical in assessing the country's decentralization policies and also, in informing future policymaking. In particular, it highlights the importance of (i) a well-planned and well-designed government policy to minimize, if not avert, unintended consequences; and (ii) mainstreaming of health policy reforms to ensure sustainability. It suggests the need to (i) take a closer look at the experience of local government units (LGUs) that were able to reap the benefits of health devolution and find out how the good practices can be replicated in other LGUs; and (ii) review and assess the various health reforms and mechanisms that have been in place to draw lessons and insights that are useful for crafting future health policies.
The study examines the role of maternal mortality rate (MMR) and infant mortality rate (IMR) in policy formulation in the Philippines, specifically the controversial legislation of Republic Act 1034, otherwise known as "The Responsible Parenthood and Reproductive Health Act of 2012". It involves taking stock and analysis of various Congressional Records and Senate Journals, particularly those relating to House Bill No. 4244 (An Act Providing for a Comprehensive Policy on Responsible Parenthood, Reproductive Health, and Population and Development, and for Other Purposes) and Senate Bill No. 2865 (An Act Providing for a National Policy Reproductive Health and Population and Development), respectively. The findings of the study show that MMR and IMR have political influence on policy formulation.
Benefit incidence analysis (BIA) is a tool used to assess how tax policy or government subsidy affects the distribution of welfare in the population. In other words, it evaluates the distribution of government subsidies among different groups in the population, in particular, among different income groups. The methodology involved in benefit incidence approach is straightforward. Nevertheless, defining deciles (or quintiles) is critical as benefit incidence estimates depend heavily on the number of individuals occupying each decile (or quintile) cell. Deciles can be defined over population, i.e., across individuals and across households. The purpose of this methodological note is to briefly illustrate the difference in benefit incidence estimates that are obtained when deciles of population/individuals in lieu of deciles of households are used in the analysis as applied on government spending on education in the Philippines.
Directing government subsidies to social services such as health care is expected to bring about positive external/social benefits and improve equity in access to health services. In general, government spending on health is envisioned to improve the well-being of beneficiaries and enhance their capability to earn income in the future. Given this perspective, the question that this paper addresses is: to what extent have the poor benefited from publicly provided health services? In particular, it attempts to assess whether government expenditure on health sector had a redistributive impact by making use of benefit incidence analysis.
The prevalence of hunger in the Philippines prompted the government to launch its hunger mitigation initiative in November 2005. The initiative consisted of two programs: the Food-for-School Program (FSP) and the Tindahan Natin Program (TNP). The FSP belongs to a class of social safety nets called conditional cash or in-kind transfers. There is a growing interest on these instruments worldwide because of evidence that they have not only been useful in providing assistance to poor families but more so because they have been found effective in securing investments in human capital among the poor. On the other hand, the TNP is a targeted food price subsidy program. Like other food price subsidy programs, it operates by lowering the price of certain food items. The lower food price effectively results in increased purchasing power that translates into an increase in the real income of beneficiaries. The budget allocation for these programs has been increasing in recent years. One interesting question to ask now is: Who benefits from the government's hunger mitigation program? The answer to this question has a large bearing on both the effectiveness and efficiency of the program. Given this perspective, the paper assesses the 1) distribution of the benefits from the FSP and TNP in 2006, and 2) implications on targeting of the use of public schools and day care centers as distribution points. In the process, it also draws some lessons in targeting.
There are three major developments in the area of foreign trade in 1990s: (a) the WTO-Uruguay Round agreement in 1995; (b) the AFTA agreement; and (c) the series of unilateral trade reform programs of the government. The paper attempts to make an impact assessment of these reforms during the period 1995 and 2000 using the updated APEX model, a computable general equilibrium of the Philippine economy. Part of the trade reform process is the shift to transaction valuation of imports. The paper also attempts to analyze the possible effects of this shift.
This paper aims to present the experience of MIDC in its pursuit for "a highly livable region of God-loving and educated people working together for a progressive, self-reliant and sustainable community." It provides the socioeconomic development in Iloilo City, MIDC's core city and delves into urbanization issues and responses of Iloilo City in terms of resource mobilization and allocation, and delivery of basic services. It also gives a background on the creation of MIDC and highlights the experience of MIDC in working together towards the attainment of its vision.
In January 2020, the Philippines joined the World Trade Organization Joint Statement Initiative on E-commerce which seeks to develop a multilateral agreement on trade-related aspects of e-commerce. This paper explores the costs and benefits of possible trade disciplines, particularly the moratorium on customs duties on electronic transmissions. Based on estimates of digitizable products, the foregone revenue of a moratorium represents about 0.10 percent and 0.65 percent of national government revenues using the average MFN rate and the bound tariff rate, respectively. Estimates based on broader definitions of electronic transmission range from 0.59 to 1.38 percent and from 3.68 to 8.59 percent of national government revenues using the average MFN rate and bound rate, respectively. However, there are practical difficulties and policy constraints which could limit the actual intake from tariffs. Various barriers to cross-border data flows could also adversely affect not only data-intensive industries but the economy more broadly. Thus, the country should support trade rules that facilitate cross-border data flows. At the same time, the government must invest in digital infrastructure necessary for an efficient and effective tax system fit for the digital economy.
Basic public education is still largely the responsibility of the central government, delivered through the Department of Education (DepEd), notwithstanding the devolution of many basic services to local government units (LGUs). However, LGUs do provide supplementary funding support to public basic education because they have access to a sustainable source of financial resources that are earmarked for the basic education subsector, the Special Education Fund (SEF). The SEF comes from an additional one percent tax on real property that LGUs are mandated to impose and collect by virtue of Republic Act 7160 otherwise known as the Local Government Code of 1991.The resources that LGUs provide to the basic education sector from their general fund are quite significant at 7 percent of total general government spending on basic education in 2001-2008. Thus, the LGUs are considered major partners of the national government in the delivery of basic education services. In this light, the study examines the management of the SEF in terms of collection, allocation, and utilization in order to maximize LGUs' support for the Education for All (EFA) initiative and to promote a more equitable allocation of resources for basic education.However, there are significant disparities in per pupil SEF spending across LGUs of different income classes and in different regions. LGUs in urban areas (i.e., cities and the large municipalities) where property values are high tend to have larger tax bases. These disparities have significant implications on the ability of the LGUs to provide additional support to the basic education sector.In terms of spending priorities, some of the major findings of the study include: (i) maintenance and other operating expenditures captured the biggest chunk of the total SEF spending of all LGUs in the aggregate (40%) while capital outlays and personal services garnered an average of 32 percent and 29 percent of LGUs total SEF spending in 2001-2008; (ii) repair/maintenance and construction of school buildings tops the list of SEF spending priorities in the sample Provincial School Boards (PSBs) and the sample City School Boards (CSBs); and (iii) relatively large portions (20%-50%) of the SEF are set aside for sports and other co-curricular activities and programs of the DepEd.The findings of the study highlight the need to improve the governance of Local School Boards (LSBs). Related to this, the measures proposed include: (i) clearer guidelines on preparation of the LSB budget, (ii) the establishment of needs-based criteria in allocating SEF across schools to ensure its efficient and effective use, and (iii) institutionalization of greater transparency between DepEd and LGUs in terms of reporting of resources that schools receive from the DepEd budget, on the one hand, and actual SEF collections and its utilization during the budget year, on the other hand, in order to foster better working relationship in the LSB.
