Public Finance Essay

Topics: Tax, Public finance, Deficit Pages: 3 (1148 words) Published: June 12, 2013
Let us first understand what is meant by Public Finance. Public finance of country, as is obvious by the name, is the money collection of a country’s Government by way of taxes. The sources of revenue of the States and the Centre are called the public finance of a country, and this is because this amount of money is the money earned by the public and given to the Government for development works, and this is exactly why this money is termed as public finance. Lately, the sources of revenue of the State and Centre have both declined considerably and the contribution of tax revenue has come down from about 37 percent in 1950-51 to just a 12 per cent in 1993-94. In the case of Central revenue, the direct tax share has declined from 36 per cent to 16 percent, while in the State tax revenue has taken a dive from 38 per cent to 11 per cent. On the other hand, rate of indirect taxes, the revenue has gone up from 14.14 per cent to 14.57 per cent. At this direct and indirect taxes. Direct taxes are taxes levied on the individual for his income, for his purchase etc. On the other hand, indirect taxes are taxes which are levied as extra to the cost of an item, e.g. customs tax. As item which has been bought for say Rs. 1000% is brought to India. There at the customs counter, the purchaser has to pay some extra amount as a tax on the item already bought and paid for. This is termed as an indirect made for the purchase of an item. As far as India is concerned, in our discussion of Public Finance, we have to consider other points also, such as the distribution of incomes. The distribution of incomes and property in india are at such a variance that, the tax base for direct taxes becomes very very narrow. Besides this, there is a wide range of tax evasion. This problem of tax evasion is being met by the Government by reducing the rate of taxes, on the top of the scale. The real problem in india is this basic problem of tax evasion and it is this only which makes the revenue...
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