Page 4 - E-NOTE 2-converted

CHAPTER 9: PUBLIC POLICIES

DEFINITION/CONCEPT

DIRECT TAXES: BURDEN CANNOT BE TRANSFERRED TO OTHERS PARTIES

INDIRECT TAXES: BURDEN CAN BE TRANSFERRED TO OTHERS PARTIES

PROGRESSIVE TAX: INCREASES WITH INCOME
PROPORTIONAL TAX: CONSTANT AT ALL INCOME LEVELS

REGRESSIVE TAX: DECLINES WITH INCOME LEVEL

EXPANSIONARY: GOV EXP > GOV RECEIPTS

CONTRACTIONARY: GOV EXP < GOV RECEIPTS

SOURCES OF GOV REVENUE

• DIRECT TAXES
• INDIRECT TAXES
• TREASURY BILLS
• INCOME FROM INVESTMENT
• SALE OF GOOD AND SERVICES
• FINES

GOVERNMENT EXPENDITURE

• OPERATING EXPENDITURE
• DEVELOPMENT EXPENDITURE

TAXATION PURPOSES

• GOVERNMENT REVENUE
• RE-DISTRIBUTE INCOME
• COMBAT INFLATION
• CORRECT BALANCE OF PAYMENT
• PROTECT LOCAL/INFANT INDUSTRIES

STRUCTURE OF TAXES

• PROGRESSIVE
• PROPORTIONAL
• REGRESSIVE

GOVERNMENT POLICY
FISCAL POLICY

• EXPANSIONARY (DEFICIT BUDGET)
• CONTRACTIONARY (SURPLUS BUDGET)