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Publicfinance 171028062357
Publicfinance 171028062357
Publicfinance 171028062357
Public Finance
Price level
Aggregate Supply
Aggregate Demand
Output (GDP)
Y YF
Markets may tolerate equilibrium output (Y)
less than full employment output (YF)
How Does Government Work?
With policy:
• Macroeconomic policy
• Fiscal policy
• Monetary policy
• Infrastructure investment
• Microeconomic policy
• Social investment and labour policy
• Industrial policy
• Competition policy
Government Budgeting
• Derived from Latin word „Bague‟ and French
word „Bougette‟. „Bougette‟ means small leather
bag.
• Budget provision initially introduced in the UK.
In 1733, the then Chancellor of Exchequer
Walpole came with the leather bag in the
parliament to present the annual statement of
income and expenditure, and when he opened bag
people used the term he is opening the budget.
Thus, the term budget became popular.
Government Budgeting
Government Budgeting
Budget
cycle
Evaluation Execution
Auditing Accounting
Components Of Budget
• Revenue Receipts
• Capital receipts
• Revenue expenditure
• Capital expenditure
Thus A Budget Has Two Main Components
[A] Receipts ,
[B] Expenditure.
Receipts
•A. Revenue Receipts
• 1. Tax Revenue
• 2. Non –Tax Revenue
•B. Capital Receipts
• 3.Recovery Loans
• 4.Other Receipts
• 5.Borrowing & Other Liabilities
• Total Receipts = A+B
Receipt Items Of The Budget
Receipts
Revenue Receipts
Tax Revenue
Tax Revenue Includes All The Revenues Earned
Through Various Kinds Of Taxes. Taxes Are
Broadly Divided Into Direct & Indirect Taxes.
Taxation
Tax Revenue: Taxes are the most important source of
government income. Taxes can be defined as "a
compulsory contribution imposed by a public authority,
irrespective of the exact amount of service rendered to
the taxpayer in return."
According to Professor Seligman, a tax is "a compulsory
contribution from a person to the government to defray
the expenses incurred in the common interest of all,
without reference to special benefits conferred."
Direct Taxes
1. Corporation Tax
2. Income Tax
3. Interest Tax
4. Wealth Tax
5. Gift Tax
6. Expenditure Tax
Indirect Tax
1. Custom Duties
2. Excise Duties
3. Sales Tax
4. Service Tax
Non Tax Revenue
It Includes The Revenue Accruing To The Government
From Sources Other Than Tax. These Are ;
1. Interest Receipts
2. Dividends
3. Grants
4. Fines
Capital Receipts
These Include Borrowing Of The Government.
Since These Receipts Have To Be Repaid By
The Government ,The Capital Receipts Are
Liabilities. Capital Receipts Include Public
Borrowing , Recivery Of Loans And Resale Of
Shares And Bonds Held By The Government.
Expenditure Items
Expenditure Items
Revenue Expenditure