Public Finance And Fiscal Policy
Definition and objectives of PUBLIC FINANCE
Public finance may be defined as an aspect of economics that deals with the financial activities of government as they relate revenue or income, expenditure, and debt operation and their overall effect on the economy.
OBJECTIVES OF PUBLIC FINANCE
1. Public finance assists the government to raise revenue for the nation.
2. It also helps the government in ensuring a favorable balance of
3. Equitable distribution of income to various sectors of the economy
4. It is used by the government to ensure that a good and acceptable fiscal policy is attained
5. Provision of employment opportunities in the country
Fiscal policy may be defined as the use of income and expenditure instruments or policies to control or regulate the economic activities in a country.
OBJECTIVES OF FISCAL POLICY.
1. It can be used by the government to ensure rapid economic development
2. Industry growth and development can be achieved through a well-packaged fiscal policy by the government
3. It can be used by the government to ensure that the wealth of the country is equitably distributed
4. Fiscal policy instruments can be used by the government to control inflation
5. Increased productivity if the government can formulate good fiscal policy for the country.
GOVERNMENT OR PUBLIC REVENUE
Government [public] revenue may be defined as the total income that accrues to all levels of administration [local, state, and federal] or from various sources.
TYPES OF PUBLIC REVENUE
1. Capital revenue [or receipts]
Capital receipts also called the irregular or extraordinary sources of revenue are sources of revenue used for meeting expenditure on heavy capital projects. Eg grants; loans, transfer from current revenue.
2. Recurrent revenue: It is a regular source of revenue in which income received on a regular or yearly basis. Eg taxation, fees and license, fines and interest on loans
SOURCES OF GOVERNMENT REVENUE
1. Taxes: it could be direct or indirect
2. Loans: it can be obtained from both internal and external sources. Eg the world Bank.
3. Grants and aids: It could be from wealthy or developed countries
4. It could be through a license. Eg driver’s license.
5. Rents and rates: Earning from properties owned by the government
6. Fees, fines, and royalties: ie from court fees, mining companies, and postage charges.
7. Through saving especially when a country has a budget surplus.s