Sources Of Public Finance

SOURCES OF PUBLIC FINANCE Taxation-most important source of public income. COMPULSARY!! No direct benefits to tax-payer.

• FEE-payment made to the government by a person in exchange of a service. Licence fee,registration fee. • PRICE- for supply of goods&services eg supply of gas,telephone,railways.VOLUNTARY.de pending on use. • SPECIAL ASSESSMENT-Compulsory payment due to a benefit derived by public works,eg TPS,BRTS,River front development,Vastrapurlake.

• PROFITS from Public Enterprise-Nava ratan companies. • PUBLIC LOANS-borrowings from internal and external sources. Required to fund new economic development or war etc. • EXTERNAL AID- for specific projects, rural sanitation and water supply, girls education, health care. • ISSUE of NEW PAPER MONEY-Creation of new money, DEFICIT financing.

CLASSIFICATION OF TAXES • Impact and incidence of a tax, • Rate of tax, • Method of tax.

.Classification –Rate of Tax • Proportional tax-rate of tax remains same irrespective of the size of taxable income. • Progressive tax-Rate of tax increases with increase in taxable income.Eg Indian Income Tax system. • Regressive Tax-rate of tax is inversally proportional to the income. • Degressive Tax-Rate of progression is relatively less.Increase in the rate of tax is less then the increase in income.

FOR AN EFFICIENT SYSTEM • • • • • • • •

EQUALITY CERTAINTY CONVINENCE ECONOMY PRODUCTIVITY ELASTIC DIVERSITY SIMPLICITY