Government Finance
1 Why the government to participate in the economy?
Government came to the stability and well-being of the people; because production in the private sector doesn’t correspond with the goals of the government about allocating resources efficiently.
2 Government Finance
Government Finance study about fact, process, and effect of import and export and public debt.
There are 5 types is
1. government income
2. Government expenditure
3. Public debt
4. Government Budget
5. Fiscal policy
3 Government income
Government income includes taxation and non taxation. Government revenue includes government income and total loans and treasury.
There are 2 types of government income
1. Taxation is money the government collected from the public for use manages the country and other business; which benefit of public because useful to anyone living in the country.
Objective
1. To government income
2. To Regulatory Taxation
3. To the allocation and income distribution.
4. To pay the debts of government
5. A policy tool in the business.
6. A tool of fiscal policy.
Adam Smith presents about taxation 4 type include...
1. Equity is people who are equally had to expense taxable equivalent; consideration from Income, Wearers and Expenditure
2. Certainty is determining clarity of the law about taxation; for example Rates of taxation, store, date and time collection and location paid.
3. Convenience is convenience of storage and dispenser
4. Economy is taking into account the cost of storage compared to the tax.
Type of taxation
Direct tax is people pay taxes will pay by own. It can’t other people pay instead. For example Income tax, Property tax and estate tax.
Indirect tax is tax free under the law but you can people to pay instead. For example Business tax, VAT, excise tax and customs tax.
Tax base consist 3 types
1. Taxes on Income including personal income tax, corporate income tax and property tax.
2. Taxes on property including estate tax , property tax
3. Taxes on Commodity including Trade taxes, excise taxes and customs tax.
Tax rate
1. Progressive role is rate will increase when more people or more wide tax
2. Proportion role is rate set at constant.
3. Regressive role is tax rate will be reduced when a person down or more wide tax.
2. Non taxation
- Public domain is income derived from ownership of natural resources. For example forest, mining and fishery.
- State enterprise is revenue from profits of state enterprises.
- Fees
- Income from help foreign
- Other income (Interest penalty and other miscellaneous income.)
4 Government Expenditure
1. Other economic
2. Expenditure on education
3. Expenditures for national defense and expenditure on public health
4. Infrastructure
5. Expenditure on the preservation of peace internal
6. Expenditure on general administration
7. Expenditure on repayment of loan
8. Other expenditures.
5 Government Budget
Government Budget is a financial plan of the government the government will save over 1 Sep -30 Oct.
Objective
1. Allocation of resources for maximum benefit.
2. Reduce the inequality of income in the individual compared to a minimum.
3. Maintain of economic stability.
Description of government budget
1. Budget balance (T = Gs) income equal to expenditure.
2. Budget deficit (T< Gs) income less expenses
3. Budget surplus (T>Gs) income over expenditure
*When inflation edited by increase tax or when deflation edited by decrease tax*
VAT system will help solve the problem are...
1. Eliminate the double taxation problem.
2. Neutral economy.
3. Conducive to investment.
4. Director of export.
5. Prevention of tax evasion.
6 Public Debt
Public debt is commitment of the government occur by direct loans or insured loans from government. Nodaway, government creates a public debt for develop and edit economic problems.
Objective of public debt
- Use as a reserve.
- Maintain budget balance
- When will pay suddenly
Type of loan
Period
1. Short-term recovery less than 1 year
2. Medium-term recovery between 1-5 years
3. Long-term recovery since 5 years or more
Source
1. Domestic recovery from the private sector and financial institutions
2. Recovered outside the country from government and international financial institutions.
7 Fiscal Policy
Fiscal Policy consists of the changes made by the Federal government in its expenditures and tax receipts to expend or contract the economy. In making these changes, the Federal government may seek to either increase the economies’s real output or control its rate of inflation.
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