Meaning,Definition and sources of Public Finance

MEANING :-

            The term 'Public Finance' refers to finances i.e. monetary resources of the public authorities or government bodies, at all levels i.e. central, state and regional or local. Thus, in short, we can say that finance is a  study of state expenditure and state revenue.

            Public finance means the study of finance of the countries government. The two words in public finance i.e. 'public' and 'finance' relate to finance management of the public. Thus, public finance refers to the 'Government's Finance'.

DEFINITION :-

            According to Hugh Dalton, "Public finance deals with the income and expenditure of public authorities and with the manner in which one is adjusted with the other."

            According to Ursula Hicks, "The main content of public finance consists of the examination and appraisal of the method by which governing bodies provide for the collective satisfaction of wants and secure the neccessary funds to carry out their purpose."

            Reviewing the definations, it can be said that public finance is the subject, which studies income and expenditure of government.

SOURCES OF PUBLIC REVENUE :-

            A modern state taps a number of sources to collect its revenue, broadly speaking the government revenues can be classified as :-

a. Tax Revenue                    b. Non-tax revenue

            Tax revenue derived from the various taxes :-

a. Direct taxes eg. Income tax, gift tax, expenditure tax, etc.

b. Indirect taxes eg. Customs duties, excise duties, sales tax, etc. non tax revenue is derived from public under takings called prices and other miscellaneous recepits. It also raises loans, short term and long term, to supplement its revenues.

            The major sources of revenue are taxes and prices. The minor sources are fees, special assessment, fines, forfeitures, tributes and indemnities, gifts and grants.