Public Finance

What is Finance?
Public finance is a subject which tells the resource allocation of government as well as resource management of government, acquisition of government and investment of government. A branch of economy concerned with resource allocation as well as resource management, acquisition and investment. Simply finance deals with matter related to money and markets. To raise money through the issuance and sale of debt or equity.

What is Public Finance?

Public finance is related to the financing of the state activities and can be narrowly defined as a subject which discusses financial operations of the Public Treasury. Philip E Taylor says in his The Economics of Public Finance that Public Finance deals with the finance of public as organized group under the institution of government. Carl C Plehm says Public finance has come by accepted usage to be confined to a study of funds raised by government to meet the cost of government. It thus deals only with the finances of government. The finances of the government include the raising and disbursement of government funds. Public finance is concerned with the operations of the Public Treasury. Hence, to the degree that it is a science, it is the fiscal science; its policies are fiscal policies, its problems are fiscal problems.

Md. Kamrul Ahsan Lecturer Dept. of Business Administration Metropolitan University, Sylhet Kamrul@metrouni.edu.bd

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Explain the Subject Matter of Public Finance?
The subject matter of public finance looks into the Financial problems and policies of the government at different levels and also studies the intergovernmental financial relations. The subject matter of public finance may be divided into following main portions:

1. The Theory of Public Revenue:

This portion deals with alternatives sources of state income. It discusses and analyses comparative advantages and disadvantages of various forms of revenue and principles which should govern the choice between them of various sources of public revenue, taxation, non-tax revenues, public debt and creation of additional currency claim our special attention.
A.

In the study of taxation, we cover various principles governing the choice of tax measures, the problems of incidence of taxation, and the effects of taxation on the working of the economy.

B. Non-tax revenues include dividends and profits from public undertakings, grants, fees, fines, interest receipts etc. C. In modern times, it is helpful to study public debt problems separately.
D.

With modern governments, public debt has become an important source of revenue but that is not at all. Its serving courses disversement of public funds and belongs to the side of public expenditure. Moreover, public debt has assumed the role of an important instrument for regulating the working of the economy.

Md. Kamrul Ahsan Lecturer Dept. of Business Administration Metropolitan University, Sylhet Kamrul@metrouni.edu.bd

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2. The Theory of Public Expenditure: Through public expenditure the government participates in and contributes to financial flows patterns. It is also a major tool for implementing welfare, growth stabilization and other policies of the government. 3. Financial Administration: All financial activities involve issues of financial administration including public budget, its passing and implementation, auditing and similar other matters. 4. Stabilization, Growth & Distributive Justice: These have become leading issues in economic policies of modern governments and separate treatment in the discussion of public finance theory. 5. Federal Finance: Existence of a multilayer (multi-level) system of government necessities a corresponding division of functions and resources between different layers as also issues and problems relating to inter governmental financial flows, financial imbalances.

Md. Kamrul Ahsan Lecturer Dept. of Business Administration Metropolitan University, Sylhet Kamrul@metrouni.edu.bd

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