A budget surplus is when the income or the receipts are more than the expenditures or the outlays. Examples of direct taxes are property tax, income tax, value-added tax, estate tax, gift tax, and more. Due to higher taxes, the individuals and businesses are left with lesser discretionary income to spend. Check your preparation with. These systems can be either progressive, regressive, or proportional. There are some sources other than taxes, which are called the Non-Tax revenue. Public finance is crucial for the development of a nation as it deals with taxation and expenditure of different civic organizations. The basic and utmost important component is the collection of the revenue by taxes, fines, charges, import duty, fees, etc. Public finance is the finance sector that deals with the allocation of resources to meet the set budgets for government entities. It should not lead to a fall in the assets of the government. It can also lead to the redistribution of income. Management of public finance is the wider term. Martin Stadelmann, Gianleo Frisari and Anja Rosenberg June 23, 2014 Downloads. Some of the expenditures are healthcare, medical facilities, salaries to the staff, members, etc. It includes the fees that are collected from the communication services companies or the telecom operators. It helps in controlling the inflation by various packages and means for the development of the nation at large. There are various types of subsidies. Role of Public Finance in a Developing Economy: In a developing economy, the State must play a very active role in promoting economic development and public finance is the instrument that the State uses in this regard. The scope public finance is not just limited to managing the finance, but it also focuses on maintaining the proper infrastructure, contributing towards the national economy, reducing the unemployment, managing the financial pillars of the economy, maintaining the hygiene and cleanness in the nation, analyses of tax collection, ensuring the burden of tax should not be very high, monitoring and enforcing the implementation of the financial and fiscal policy, maintaining the confidence of the public at large, etc. Do you want to crack UPSC in first attempt? The net social welfare will be maximum where the MSS from taxation is equal to MSA from public expenditure. The revenue receipts are non-redeemable and can be further classified into the tax revenue and non-tax revenue. Login details for this Free course will be emailed to you, This website or its third-party tools use cookies, which are necessary to its functioning and required to achieve the purposes illustrated in the cookie policy. Some of them are listed below: This subsidy helps to encourage the suppliers to increase the output of a particular product by helping them cut their costs. There are several effects of public expenditure on the economy. San Giorgio Group Policy Brief: The Role of Public Finance in CSP – Lessons Learned. It happens when the government raises the taxes to fund the introduction of new welfare programs or the expansion of the existing ones. The states and the UTs borrow loans to implement a plan or policy. It encourages investment through various policies and packages. Facebook; The Role of Public Finance. The consumption or the consumer subsidy helps to encourage consumer behavior. Introductions to public financial management - Nature and Scope of Public Finance - General overview of public financial management as envisaged by the constitution - Responsibility of National and County Treasuries - Overview of the public financial management Act Purchasing and supply are key mechanisms in enabling the government to implement its plans. It also deals with the monitoring and distribution of these goods and services to the right places or people at the right times. Public finance is the branch that deals with the government’s revenue and expenditure. This branch of economics is responsible for the scrutiny of the meaning and effects of financial policies implemented by the government. Monitor the functioning and effectiveness of the financial policy. A fiscal administration exhibits the reality of the government and the public organization in their provision of public goods or services for the citizens of the country. Direct taxes are those taxes imposed on the property and the income of an individual or a company. It revolves around the role of government income and expenditure in the economy. The main components of public finance include activities related to collecting revenueSales RevenueSales revenue is the income received by a company from its sales of goods or the provision of services. The management of public finance plays an important role in the development of the economy as the growth of the economy largely depends on its proper utilization. The responsibilities of the Senate budget committee in public finance management in Kenya are to-. However, sometimes it also ends up bringing adverse effects on people’s willingness to work and save. There are numerous ways in which public finance is capable of affecting the economy of a nation. The County Assembly is one of the arms of the county government alongside the County Executive and the County Public Service. 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