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Importants of Public Finance

Importants of Public Finance. Public Finance. Definition1: Public finance is the study of the role of the government in the economy . ( Gruber , Jonathan (2005). Public Finance and Public Policy. New York: Worth Publications. p. 2. ISBN 0-7167-8655-9 . )

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Importants of Public Finance

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  1. Importantsof Public Finance

  2. Public Finance Definition1: Public finance is the study of the role of the government in the economy. (Gruber, Jonathan (2005). Public Finance and Public Policy. New York: Worth Publications. p. 2. ISBN 0-7167-8655-9.) Definition 2: Thefieldofeconomicsthatanalyzegovernmenttaxation and spending. (Rosen, S. H., Gayer, T. Public Finance, McGraw Hill, 2010)

  3. Definition3: It is the branch of economics which assesses the government revenue and government expenditure of the public authorities and the adjustment of one or the other to achieve desirable effects and avoid undesirable ones (Jain, P C (1974). The Economics of Public Finance.) Definition 4: Public finance isthebranchofeconomicswhichdoes not try to solveonlytheproblemshow to be finance public sector, but evenhow to influence theeconomicactivitiesofeconomicsubjects and how to distributetheeconomicalsources… (Tománek)

  4. Definition 5: Public Finance isnothingelsethan a sophisticateddiscussionoftherelationshipbetweentheindivisual and state. Thereis no betterschooloftrainingthan public finance (Vaclav Klaus)

  5. HistoricalOverview – tax theories MiddleAges – taxes are collectedirregularly to coverexpensesofaristocracy. - property tax: taxesfromrealestates - tolls (using a municipalbridge) - undirectconsumption tax: fromgoods

  6. Tax Theories Tax theoriesdiffersafterexplanationwhyitisnecessary to imposetaxes: • Exchange theory • Ensurancetheory • Theoryof solidarity (victimtheory) • Capacitancetheory • Socialpolicytheory • Theoryof neutrality • Theoryofone tax • Theoryof no taxes

  7. The Tax Systems There are several tax systemsdeveloped by economists. There are someminimalrequirementsforefective tax system: • to have sufficient revenues • to have equal tax burden • to implement such taxable instruments, which does not influence economical decisions of taxpayers • to have possibility to cover for development activity • To be cheap, simple, comprehensive, low administrative

  8. Tax systems • A. Smith tax system • Liberal tax system • Advencedeconomysystem • Central plan economy system

  9. Adam Smith Tax System • Princip of generality (taxesshouldbeimposed to anymemeberof society) • Payment ability of society members • Precision (condition of tax payment should be precisely and comprehensive defined) • Affordabilityof tax paymentfortaxpayer • Minimaladministrativecostsfor tax system

  10. Liberal tax system • Neutrality (taxesshould not influence thetaxpayerseconomicdecisions) • Stability (revenuesof public budget should not beinfluenced by economicalcycle) • Dynamics (shouldbedynamicenough to reachbalanced budget)

  11. Advencedeconomysystem • Horizontalequity (equal tax for all, no matter what is their income) • Verticalequity (progressive taxation)

  12. Central plan economy tax system • Long term planing(prices are under state control) • Sufficient revenues • Simplicity • Long term stability

  13. Tax equity • Horizontal • Vertical

  14. TheMainEffectsof Public Finance • AllocationofResources • DistributionofIncome • MacroeconomicStabilization

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