PUBLIC FINANCE AND FISCAL POLICY (taxes, expenditures, budget by pyb17727

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									 PUBLIC FINANCE AND
 FISCAL POLICY (taxes,
  expenditures, budget
   deficit, public debt)

 1. GOVERNMENT CONTROL OF THE
             ECONOMY
  2. GOVERNMENT EXPENDITURES
3. ECONOMIC ASPECTS OF TAXATION
       4. BUDGET DEFICIT
         5. PUBLIC DEBT
1. GOVERNMENT CONTROL OF
       THE ECONOMY


Instruments:
  Taxes on incomes and goods
  Expenditures on certain goods and
  services
  Regulations or controls
  Trends in the size of the government
  (P; 2X)
Government taxation
Improving economic efficiency (monopoly,
externalities and opublic goods, imperfect
information)
Reducing inequality
Stabilizing through macroeconomic
policies
Conducting international economic policy
(reducing trade barriers, assistance
programmes, coordinating economic
policies, protecting global environment)
2. GOVERNMENT EXPENDITURES

Increasing role of the state in the
20th century
Public choice theory (agregation of
preferences,…)
Fiscal federalism
P (2x)
Slovenia (4 parts)
In your countries?
Federal expenditures in USA
State / local governments
 3. ECONOMIC ASPECTS OF
        TAXATION


“Taxes are what we pay for a civilzed
society”

“Taxes are robbery”
Taxes (4x)
Taxes and social contributions
(benefits)
Direct (levied directly on individuals
or firms) and indirect (levied on
goods and services)
Progressive, regressive, proportional
(P)
Income tax: Slovenia (16,27,41%)
In your countries?
USA
Taxes: the individual income tax,
consumption or sales taxes (VAT),
property tax, taxes on capital
income, gift taxes, custom duties,
corporate income tax,…….

Tax structure: tax rate, average tax
rate, marginal tax rate (the extra tax
paid per dollar of extra income; P)
Individual calculation
      Principles of taxation
The   benefit principle
The   ability to pay principle
The   horizontal equity principle
The   vertical equity principle
The   tax neutrality principle
The   non-discriminatory principle
The   polluter pays principle
The problem of economic efficiency vs.
social justice (fairness)
Pragmatic compromises in taxation
Unknown effect (response of work to
taxes depends on the shape of the
supply curve) (P)
Local/regional/state/global taxes
Two trends: from income to
consumtioon, from income to green
taxes (PPP principle)
Ramsey rule
Tax burden, tax evasion
Tax reforms and problems
4. GOVERNMENT BUDGET

Budget surplus (T > G)
Budget deficit (G > T)
Balanced budget G = T
Actual, structural and cyclical
budgets
Fiscal policy (tight, expansioary)
Laffer curve (P)
How to cover budget deficit? (3x)
         5. PUBLIC DEBT
Accumulated deficits (Debt is water in the
tub, while a deficit is water flowing into the
tub)
External and internal debt
Net debt (debt by households, banks,
busineses,….) and gross debt (net debt plus
government debt)

Crowding out effect and monetary reaction
Debt and displacement of private capital (P)
Public debt and economic growth (P)
          EU BUDGET
EU budget = 1% GNP= 131 billions
eur
Cohesion policy (45%) + agriculture
(42,6%) + security (5,8%) +
globalization (5,6%)
decentralization in fiscal policy and
centralization in monetary policy
Harmonisation of VAT
Crisis and need for new fiscal policy
in EU

								
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