B Com Exam > B Com Notes > Public Finance > Capital Levy & Deficit Financing - Public Expenditure, Public finance
Capital Levy & Deficit Financing - Public Expenditure, Public finance | Public Finance - B Com PDF Download
Capital levy
A capital levy is a tax on capital rather than income,collected once rather than annually. For example, a capital levy of 30% will see an individual or business with a net worth of $100,000 pay $30,000 in tax, regardless of income. It is considered difficult for a government to implement, as the confiscatory nature of taxation is more apparent than with income tax. Thus, once such a levy is enacted, capital flight is likely to ensue.
Examples of capital levies: the Italian government of Giuliano Amato imposed a 0.6 percent levy on all bank deposits on 11 July 1992; and the Cypriot government levied 47.5 percent of Bank of Cyprus deposits over one hundred thousand Euros in July 2013.
Some economists argue that capital levies are a disincentive to savings and investment, but others argue that in theory this need not be the case. The latter view has gained some acceptance as more and more heavily indebted nations struggle to raise revenues; in October 2013, the International Monetary Fund released a report stating, "The sharp deterioration of the public finances in many countries has revived interest in a 'capital levy' – a one-off tax on private wealth – as an exceptional measure to restore debt sustainability. The appeal is that such a tax, if it is implemented before avoidance is possible and there is a belief that it will never be repeated, does not distort behavior."The next year the Bundesbank proposed that Eurozone countries should attempt a one-off levy of bank deposits to avoid bankruptcy.
A February 2014 report by Reuters showed the idea had gained traction in the European Commission, which will ask its insurance watchdog later that year for advice on a possible draft law "to mobilize more personal pension savings for long-term financing".
Deficit Financing
Deficit refers to the difference between expenditure and receipts. In public finance, it means the government is spending more than what it is earning. Government expenditure and revenue can be split into capital and revenue. Capital expenditure generally includes those expenses which result in creation of assets. Revenue expenditure is primarily that which does not result in asset creation
The document Capital Levy & Deficit Financing - Public Expenditure, Public finance | Public Finance - B Com is a part of the B Com Course Public Finance.
All you need of B Com at this link: B Com
|
37 videos|35 docs|15 tests
|
FAQs on Capital Levy & Deficit Financing - Public Expenditure, Public finance - Public Finance - B Com
| 1. What is a capital levy and how does it relate to public expenditure? |  |
Ans. A capital levy is a form of taxation imposed on individuals or businesses based on their wealth or assets. It is typically implemented during times of economic crisis or when there is a need for additional revenue for public expenditure. The capital levy aims to redistribute wealth and provide funds for government projects or initiatives.
| 2. What is deficit financing and how does it impact public finance? | |
Ans. Deficit financing refers to the practice of a government borrowing money to cover its budget deficit. It involves the issuance of government bonds or other debt instruments to finance public expenditure when tax revenues are insufficient. Deficit financing can have both positive and negative impacts on public finance. It can stimulate economic growth by funding infrastructure projects or social welfare programs but may also lead to increased government debt and interest payments.
| 3. How does a capital levy differ from deficit financing in terms of funding public expenditure? | |
Ans. A capital levy and deficit financing differ in terms of their sources of funding for public expenditure. A capital levy directly taxes the wealth or assets of individuals or businesses, providing immediate revenue for government projects. On the other hand, deficit financing involves borrowing money from the public or financial institutions, which results in the accumulation of government debt that needs to be repaid over time.
| 4. What are some advantages of implementing a capital levy for funding public expenditure? | |
Ans. Implementing a capital levy for funding public expenditure can have several advantages. Firstly, it can promote wealth redistribution and reduce income inequality, as it targets those with higher levels of wealth or assets. Secondly, it can provide a one-time injection of revenue for government projects without the need for borrowing or increasing the national debt. Lastly, it can be seen as a fair and equitable way to finance public expenditure, as it places a higher burden on those who have accumulated more wealth.
| 5. What are some potential drawbacks or challenges associated with deficit financing for public finance? | |
Ans. Deficit financing can pose several challenges for public finance. One potential drawback is the accumulation of government debt, which can lead to higher interest payments and future financial burdens. Additionally, deficit financing may result in inflationary pressures if the increased money supply is not properly managed. Moreover, reliance on borrowing can make the economy vulnerable to changes in interest rates and investor confidence. Lastly, deficit financing may also lead to a crowding-out effect, where private investment is reduced as the government competes for available funds.
Related Exams
About this Document
|
4.64/5 Rating |
|
Dec 20, 2024 Last updated |
Document Description: Capital Levy & Deficit Financing - Public Expenditure, Public finance for B Com 2024 is part of Public Finance preparation.
The notes and questions for Capital Levy & Deficit Financing - Public Expenditure, Public finance have been prepared according to the B Com exam syllabus. Information about Capital Levy & Deficit Financing - Public Expenditure, Public finance covers topics
like and Capital Levy & Deficit Financing - Public Expenditure, Public finance Example, for B Com 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises and tests below for Capital Levy & Deficit Financing - Public Expenditure, Public finance.
Introduction of Capital Levy & Deficit Financing - Public Expenditure, Public finance in English is available as part of our Public Finance
for B Com & Capital Levy & Deficit Financing - Public Expenditure, Public finance in Hindi for Public Finance course.
Download more important topics related with notes, lectures and mock test series for B Com
Exam by signing up for free. B Com: Capital Levy & Deficit Financing - Public Expenditure, Public finance | Public Finance - B Com
Description
Full syllabus notes, lecture & questions for Capital Levy & Deficit Financing - Public Expenditure, Public finance | Public Finance - B Com - B Com | Plus excerises question with solution to help you revise complete syllabus for Public Finance | Best notes, free PDF download
Information about Capital Levy & Deficit Financing - Public Expenditure, Public finance
In this doc you can find the meaning of Capital Levy & Deficit Financing - Public Expenditure, Public finance defined & explained in the simplest way possible. Besides explaining types of
Capital Levy & Deficit Financing - Public Expenditure, Public finance theory, EduRev gives you an ample number of questions to practice Capital Levy & Deficit Financing - Public Expenditure, Public finance tests, examples and also practice B Com
tests
|
Explore Courses for B Com exam
|
|
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
Related Searches
Objective type Questions
,Sample Paper
,mock tests for examination
,Public finance | Public Finance - B Com
,past year papers
,Capital Levy & Deficit Financing - Public Expenditure
,study material
,Semester Notes
,Important questions
,Capital Levy & Deficit Financing - Public Expenditure
,shortcuts and tricks
,Exam
,practice quizzes
,Free
,MCQs
,video lectures
,Viva Questions
,Public finance | Public Finance - B Com
,Summary
,Capital Levy & Deficit Financing - Public Expenditure
,Previous Year Questions with Solutions
,Public finance | Public Finance - B Com
,Extra Questions
,ppt
;
Additional Information about Capital Levy & Deficit Financing - Public Expenditure, Public finance for B Com Preparation
Capital Levy & Deficit Financing - Public Expenditure, Public finance Free PDF Download
The Capital Levy & Deficit Financing - Public Expenditure, Public finance is an invaluable resource that delves deep into the core of the B Com exam.
These study notes are curated by experts and cover all the essential topics and concepts, making your preparation more efficient and effective.
With the help of these notes, you can grasp complex subjects quickly, revise important points easily,
and reinforce your understanding of key concepts. The study notes are presented in a concise and easy-to-understand manner,
allowing you to optimize your learning process. Whether you're looking for best-recommended books, sample papers, study material,
or toppers' notes, this PDF has got you covered. Download the Capital Levy & Deficit Financing - Public Expenditure, Public finance now and kickstart your journey towards success in the B Com exam.
Importance of Capital Levy & Deficit Financing - Public Expenditure, Public finance
The importance of Capital Levy & Deficit Financing - Public Expenditure, Public finance cannot be overstated, especially for B Com aspirants.
This document holds the key to success in the B Com exam.
It offers a detailed understanding of the concept, providing invaluable insights into the topic.
By knowing the concepts well in advance, students can plan their preparation effectively.
Utilize this indispensable guide for a well-rounded preparation and achieve your desired results.
Capital Levy & Deficit Financing - Public Expenditure, Public finance Notes
Capital Levy & Deficit Financing - Public Expenditure, Public finance Notes offer in-depth insights into the specific topic to help you master it with ease.
This comprehensive document covers all aspects related to Capital Levy & Deficit Financing - Public Expenditure, Public finance.
It includes detailed information about the exam syllabus, recommended books, and study materials for a well-rounded preparation.
Practice papers and question papers enable you to assess your progress effectively.
Additionally, the paper analysis provides valuable tips for tackling the exam strategically.
Access to Toppers' notes gives you an edge in understanding complex concepts.
Whether you're a beginner or aiming for advanced proficiency, Capital Levy & Deficit Financing - Public Expenditure, Public finance Notes on EduRev are your ultimate resource for success.
Capital Levy & Deficit Financing - Public Expenditure, Public finance B Com Questions
The "Capital Levy & Deficit Financing - Public Expenditure, Public finance B Com Questions" guide is a valuable resource for all aspiring students preparing for the
B Com exam. It focuses on providing a wide range of practice questions to help students gauge
their understanding of the exam topics. These questions cover the entire syllabus, ensuring comprehensive preparation.
The guide includes previous years' question papers for students to familiarize themselves with the exam's format and difficulty level.
Additionally, it offers subject-specific question banks, allowing students to focus on weak areas and improve their performance.
Study Capital Levy & Deficit Financing - Public Expenditure, Public finance on the App
Students of B Com can study Capital Levy & Deficit Financing - Public Expenditure, Public finance alongwith tests & analysis from the EduRev app,
which will help them while preparing for their exam. Apart from the Capital Levy & Deficit Financing - Public Expenditure, Public finance,
students can also utilize the EduRev App for other study materials such as previous year question papers, syllabus, important questions, etc.
The EduRev App will make your learning easier as you can access it from anywhere you want.
The content of Capital Levy & Deficit Financing - Public Expenditure, Public finance is prepared as per the latest B Com syllabus.
|
© EduRev
|
Education Revolution
|
Follow Us
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup