University of the Visayas

Colon St., Cebu City

www.uv.edu.ph

Understanding a Nations Fiscal

Architecture:
Building Appropriate Revenue and
Expenditure Systems
SHEFFERD S. BERNALES, M.M.

Lecturer

Concept of Fiscal Architecture

Prof.

Sally Wallace of Georgia

State University
it refers to central factors,
components or characteristics of a
country that influence a countrys
public finances and ability to adapt
to a more general public policies.

Major Factors, Components or

Characteristics

DEMOGRAPHICS

ECONOMICS

INSTITUTIONS

Family Size and Composition

Population Growth
Age Distribution
Race and Ethnicity
Health

DEMOGRAPHICS

Employment
and Output
Structure

Technology

ECONOMIC
S

Globalizatio
n

Compositi
on and
Distributio
n of
Income

State and Local

Fiscal Structure

INSTITUTIONS
Intergovernmen
tal Landscape

Debt and
Pension
Liabilities

Sample Fiscal Architecture and

Pressures
Variables

AGE DISTRIBUTION

Basic Trend

Increased elderly
working aged

Effect on VAT

Increased consumption of nontaxable goods, reduce growth on

VAT

As a share of consumption,
decrease due to increased share
of medical purchase

Import Duties

Increased demand for imports

Increase
supplies
taxable

Corporate Income
Tax

Reduced consumption of durable

goods, reduced CIT

Neutral

Individual Income
Tax

Reduced
reduced IIT

Decrease due to associated

decrease in labor supply

taxable

relative

HEALTH
to

income,

Increased incidence of AIDs

if
or

medical related
equipment are

Education

Reduced demand

Potential
decrease
due
to
decrease in life expectancy for
infants

Safety Social Net

Increase in number of clients,

increasing expenditures

Increase due to costs associated

with
unemployment
and
orphans

Primary Health

Increase in the number of clients

and intensity of care, increased
costs

Increase due to basic needs

Policy Options
Variables

AGE

Trend

Increasing
elderly

Summary
of Fiscal
Impact

Reduced revenue potential due

Reduced tax based, reducing
to
earnings
ability
and
revenue
growth,
increased
consumption
of
medical
expenditure
pressure
from
products. Increased pressure
social services and housing
on social and health services.

Summary
of Options

Countries experiencing AIDs

epidemics could appeal to the
international community for
assistance. The fiscal effects of
Adjust payroll tax system for
health
issues
could
be
pension payments, increase
mitigated
by
an
overall
age for full benefits,
rationalization of the revenue
system closing outdated
loopholes,
increasing
tax
administration

Institution
al Issues

percentage

HEALTH

Importance of voter behavior

of

Increased incidence of AIDs

Countries
with
widespread
epidemics will be hard pressed
to find revenue valves to solve
the pressure on increased
expenditures. Governments will

References:
Wallace,

S. (2001). Fiscal Architecture and the

Analysis of Public Expenditure Needs and
Revenue Capacity, Georgia State University
Wallace, S. (2015). Fiscal Architecture of
Connecticut, Georgia State University
Karabarbounis, L. & Neiman, B. (2013). The
Global Decline of the Labor Share: The Quarterly
Journal of Economics, Oxford University Press
Bird, R. (1992). Tax Policy and Economic
Development, Johns Hopkins University Press.
Baltimore, MD
Lee, R. & Johnson, R. (1998). Public Budgeting
Systems, Aspen Publisher, Inc., Maryland

END OF PRESENTATION