IVet0 x IeCn COMPLETE COURSE: 8307487876 / 9137336685Fiver mn “Public Goods > Good which consumed by one person, doesn’t reduce the quantity available for others. > In simple words, these goods are non-rival in nature. Private Goods > goods which give utility to the person consuming the co: di > And benefits derived are denied to others. “Merit Goods > Given by Musgrave > These are the goods whose consumption s| couraged. Principles of Public Financ Social Advantage = Pigou called it Principles of least aggré sacrifice/ Principle of Maximum Aggregate Welfar > Prof Dalton and Prof Pigou QQ > The principle states th jue collected and spent by the state should be in such abner which maximizes the welfare of the people. > According to t iple, > Utility Gain AU’ SS @ 5 > Adequate tools, > Operational data, Flexibility, > Two-Way Budget Management/ Co-operation; > Multiple Procedures er afar an aftr Page 1[dives eal "Economic Classification of Budget (1956 > Prepared by Ministry of Finance > The expenditure is divided under the following heads: 1. Current account transactions in goods and services and transfers of government administration. 2. Transactions in goods and services and transfers in current accadnt Department of Commercial Undertakings (DCU). 3. Transactions in goods and services and transfers in capi ccountvot government administration and DCU. 4. Change in financial assets for current account and capi: unt. 5. Change in financial liabilities for capital accou! ment and DCU. 6. Cash and Reconciliation Account: Leftovers in bey of government administration and DCUs. “Performance Budgeting The resources were allocated on the of performance. Programme Budgeti ning > Out of the available ite e authorities choose the best & the most economical ii rfns of use of resources, cost, etc. “Incremental eting > Also knowna' ie [tem Budgeting/ Incrementalism di > Last yeays revised to a little extent, that is, > its j ension to the previous budget. Budgeting 969) given by Peter A. Phyrr ‘department is required to justify its expenditures and budget quests from the scratch. he programmes are regularly evaluated and justification is given to continue the programme. > Under this, no minimum level of expenditure is allowed to be taken as given er afar an aftr Page 2iVei0 orn “Revenue Deficit = Revenue Expenditure — Revenue Receipts “Capital Deficit = Capital Expenditure - Capital Receipts “+ Budget Deficit = Capital Deficit + Revenue Deficit “Fiscal Deficit = Budget Deficit + Sale of public assets + bo; ings and liabilities of government “Primary Deficit 4) = Fiscal Deficit - Net Interest ents “Net Fiscal Deficit = Fiscal Deficit - Loans and Advanc Net Primary Defici = Net Fiscal Deficit st payments “Monetized Di = mathe of RI fe m to centre’s borrowing programme sWagnet tes w of Increasing State Activities (1880) > Wa yy lic expenditure increases, role of the public sector jerky, step-like fashion. > Gave the concepts of displacement and concentration effects. mate mn aftead Page 3Fiver rn Colin-Clark Hypothesis > Colin Clark If government expenditure is more than 25%, then it leads to inflation. > Critical limit of public expenditure is 25%. \ PUBLIC EXPENDIT! REVENUE EXPENDITURE “Canons of ic Expenditure > Given bi > Mon fit, f Economy, anction, of Surplus “Indirect Tax er afar an aftr Page 4Fiver rn > Affect the incomes of the people through their consumption activities. Ad-Valorem > Taxes Imposed on the value of the property/good. Specific tax > Levied on the per unit of the commodity produced or, > Tax imposed on weight or size of the commodity. “Corporation Tax Imposed on the profits of a company. “Expenditure Tax > Imposed on the expenditure undertaken ‘corporation. Death Duty > Imposed on the property inherited e death of the person. Gift Tax > Tax on gifts of a certaii “Wealth tax > Tax on property/asset. “Capital-gain > Imposed on thefiet gains realised on the sale of property at a h higher: ic at was paid for it. Cu im| d on imports and exports of commodities. Duty 6n production and sales. “Sales tax > Tax on sales of a commodity. “Service tax > Tax on services availed by the consumer. er afar an aftr Page 5Bes rn “Fringe Benefit tax > Tax to be paid by the employers for benefits given to the employees collectively. “Canons of taxation > > Canon of Equality, > Canon of Economy, > Canon of Certainty, > Canon of Convenience Benefit Principle > Also known as ‘Contractual Theory’ > Lindahl Government acts as a plier o and the taxes should be charge: derived or received. “Ability to Pay > Theory Seligman Taxes reyes according to the ‘ability to pay’ of the tax o> CONCEPTS RELA TO TAXATION “Impact of > It is the imme riginal/Primary burden of tax Shifti x isf€xring the burden of tax from one person to another. i€ goods and services ion of the benefits nce of Tax Jrsula Hicks, Dalton on who faces the final burden of tax. v Tax Ratio er afar an aftr Page 6faivee orn Tax Ratio = Revenue from taxes Total National Income Tax Buoyancy > Reflects how income is increasing from taxation due to increase or expansion in tax base .e change in tax income/revenue _ Percentage increase in tax base buoyancy = > In calculating buoyancy of tax, we consider both retionary and automatic changes. “Laffer Curve > Depicts the relationship betw ind tax revenues “Fiscal Federalism > Division of public sector functions and finances among different layers or tiers of the gove and no layer is completely sovereign. 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