Public Sector Economics: Made Simple introduces the reader, step by step, clearly and methodically, to the concepts and principles of public sector economics. The functions and finance of central government, local authorities, and nationalized industries are examined within the framework of a national economy. Examples are given largely from the British economy but international comparisons are made. A large number of tables and diagrams are also provided so as to relate the theory to the real world.

Comprised of 21 chapters, this book discusses the theory and practice of public finance, with emphasis on public expenditure, taxation, and the national debt. Fiscal policy with its economic, social, and political objectives is also considered and viewed in relation to monetary policy and prices and incomes policy. After an overview of economic systems and models, the book focuses on allocation of resources and provision of public goods; public expenditure in Britain; the theory of taxation and the tax system; taxes on income, profits, consumption, and capital; and taxable capacity, incidence of taxation, and the tax burden. Fiscal policy is analyzed in relation to economic growth, standard of living, and distribution of income and wealth.

This monograph is intended for economists and students taking economics-related courses.

Contenu

Foreword
Section 1: Economie Framework
1 Economie Systems and Models
Political Economy
Types of Economie System
Economie Models
The Sector Model of an Economy
Input-Output Model
Summary
Suggested Further Reading
Exercises
2 National Income
Purposes of National Income Data
Early Estimates of National Income
Social Accounting
Definition and Calculation of National Income
Income Method
Expenditure Method
Output Method
Choice of Method of Calculating National Income for Developed and Developing Countries
International Comparison of National Income
Comparison of the Standard of Living
Determination of National Income and the Multiplier
Fluctuations in National Income
Trade Cycle Theories
Summary
Suggested Further Reading
Exercises
3 Allocation of Resources and Provision of Public Goods
Optimum Allocation
Utilitarian Approach to Economic Welfare
Market Allocation of Resources and Government Intervention
Opportunity Cost
Social Choice
Summary
Suggested Further Reading
Exercises
Section 2: Public Finance Expenditure
4 Public Expenditure
Public Finance
Functions of the State
Theories of Public Expenditure
Observations on the Growth of Public Expenditure
Trends in Public Expenditure, Current and Constant Prices
Empirical Evidence on the International Growth of Public Expenditure
Reasons for the Growth of Public Expenditure
Restraints to the Growth of Public Expenditure
Consequences of the Growth of Public Expenditure
Summary
Suggested Further Reading
Exercises
5 Public Expenditure in Practice: The British Experience
Phases in the Growth of Public Expenditure
Development of Social Services
Education
Health Services
Relief of the Poor
Establishment of the Welfare State
Summary
Suggested Further Reading
Exercises
Section 3: Public Finance, Taxation
6 The Theory of Taxation and the Tax System
The Need for Revenue
Early Taxes
Theories of Taxation
Equality of Sacrifice
Rates of Taxation
Principles of Taxation
A Tax System
Merits and Demerits of Direct and Indirect Taxation
Pattern of Taxation
Revenue Maximisation, 'Laffer Curve' Analysis
Summary
Suggested Further Reading
Exercises
7 Taxes on Income
Basis of Income Tax
The Origin of Income Tax in the UK
Compliance of Income Tax with the Principles of Taxation
Income Tax and Incentives in Theory
Income Tax and Incentives in Practice
Supply of Labour and Taxation
Empirical Evidence on Tax Disincentives and the Supply of Labour
Effect of Progressive Income Tax on the Level of Personal Savings and the Pattern of Investment
Empirical Evidence on Effects of Taxation on Savings and Investment
Inflation and Indexation for Income Tax Purposes
Negative Income Tax (NIT)
Summary
Suggested Further Reading
Exercises
8 Taxes on Profits
Early Taxes on Incomes of Businesses
Computation of Profits
Illusory Profits, Inflation and Taxation
Profits Tax, Differentiated Rate on Distributed and Undistributed Profits
Corporation Tax, The New System of Computation
The Effects of Profits Taxes
Taxation of Excess Profits
A New Tax on Profits from North Sea Oil
Calculation of Petroleum Revenue Tax
The Use of Government Revenue from North Sea Oil
Social Security Contributions as a Form of Taxation
The Surcharge, Departure from the Principle of Insurance
Summary
Suggested Further Reading
Exercises
9 Taxes on Consumption
Types of Taxes
Choice of Goods to be Taxed
Tax Rates
Negative Indirect Taxation-Subsidies
Indirect Taxation in the UK
Customs Duties: Use as Protective Measures
Trend Away from Tariffs, GATT, EEC
Excise Duties
Purchase Tax
Value Added Tax (VAT)
Licences
Summary
Suggested Further Reading
Exercises
10 Taxes on Capital
Definition of Capital
Types of Taxes on Capital
Revenue and Policy Aspects of Taxation of Capital
Capital Transfer Tax
Capital Gains Tax
Wealth Tax
Valuation and Problems of Indexation
Effect of Inflation on Value of Assets
Compliance of Capital Taxes with the Principles of Taxation
Trend Away from Taxes on Capital
Taxation of Capital in the UK
Stamp Duties
Summary
Suggested Further Reading
Exercises
11 Reform of the Tax System, Expenditure Tax and the Meade Report
Need for Reform
Idea of an Expenditure Tax
Outline of a Universal Expenditure Tax
Problems of Introducing the New System
Advantages of an Expenditure Tax
Summary
Suggested Further Reading
Exercises
12 Taxable Capacity, Incidence of Taxation and the Tax Burden
Taxable Capacity Defined
Measurement of Taxable Capacity
Tax Burden of a Country
Taxpayers' Burden
Incidence of Taxation
International Comparison of the Tax Burden
The Hidden Cost of Taxation, Compliance and Avoidance Costs
The 'Black Economy' and Taxation
Summary
Suggested Further Reading
Exercises
Section 4: Budgets and Borrowing: Finance of Central and Local Government and the EEC Budget
13 Central Government Finance
The Budget
Types of Budget
Preparation of the Budget: Administrative Framework
Role of Parliament
Audit of Public Expenditure
Control and Management of Public Expenditure
Cash Limits
European Community Budget
Summary
Suggested Further Reading
Exercises
14 Public Sector Borrowing
National Debt Defined
Structure of the National Debt
Acquisition of National Debt Holdings
National Debt as an Asset and as a Liability
Management of the National Debt
Origin of the British National Debt
Attempts to Repay the National Debt. The Sinking Fund
Public Sector Borrowing Requirement (PSBR)
Consequences and the Burden of National Debt
The Internal and External Burden of the National Debt
International Monetary Fund (IMF)
International Bank for Reconstruction and Development
Summary
Suggested Further Reading
Exercises
15 Local Government Finance
Organisation and Functions of Local Government
Features of a Financial System
Provision of Public Goods and Services
Pattern and Growth of Local Authorities' Expenditure
Reasons for Growth
Sources of Finance
Incidence of Rates
Arguments in Favour a…