B Com Exam > B Com Videos > Public Finance > Effects of taxation - Public revenue, Public finance
Effects of taxation - Public revenue, Public finance Video Lecture | Public Finance - B Com
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37 videos|35 docs|15 tests
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FAQs on Effects of taxation - Public revenue, Public finance Video Lecture - Public Finance - B Com
| 1. What is public revenue and how is it generated through taxation? |  |
Ans. Public revenue refers to the income or funds collected by the government to finance its expenses and provide public goods and services. Taxation is one of the primary ways through which the government generates public revenue. It involves imposing charges or levies on individuals, businesses, and other entities based on their income, profits, property, or consumption. The government collects these taxes and uses the funds to finance various public expenditures.
| 2. What are the different types of taxes that contribute to public revenue? | |
Ans. There are several types of taxes that contribute to public revenue. Some common types include:
1. Income Tax: A tax levied on individuals and businesses based on their income or profits.
2. Sales Tax: A tax imposed on the sale of goods and services, typically calculated as a percentage of the purchase price.
3. Property Tax: A tax based on the value of real estate or other properties owned by individuals or businesses.
4. Corporate Tax: A tax imposed on the profits of corporations and other business entities.
5. Excise Tax: A tax levied on specific goods, such as alcohol, tobacco, or fuel.
These are just a few examples, and there can be various other types of taxes depending on the country and its tax system.
| 3. How does taxation affect public finance? | |
Ans. Taxation plays a crucial role in public finance as it directly impacts the government's revenue and expenditure. Here are some ways taxation affects public finance:
1. Revenue Generation: Taxes provide the government with the necessary funds to finance its various expenditures, such as infrastructure development, education, healthcare, defense, and social welfare programs.
2. Redistribution of Wealth: Taxation can be used as a tool for redistributing wealth and reducing income inequality. Progressive tax systems, where higher-income individuals are taxed at a higher rate, can help in achieving this objective.
3. Economic Stimulation or Deterrence: Tax policies can be employed to stimulate or deter certain economic activities. For example, governments may offer tax incentives to promote investment or impose higher taxes on activities that are harmful to the environment.
4. Fiscal Policy Management: Taxation is an essential component of fiscal policy, which involves using government spending and taxation to influence the economy. By adjusting tax rates, the government can stimulate or restrain economic growth, control inflation, or manage budget deficits.
5. Public Debt Reduction: Tax revenues can be used to repay public debt, reducing the burden on future generations and ensuring fiscal sustainability.
| 4. How do individuals and businesses benefit from public goods and services financed by taxation? | |
Ans. Individuals and businesses benefit from public goods and services financed by taxation in several ways:
1. Infrastructure: Tax revenues are used to build and maintain essential infrastructure like roads, bridges, airports, and public transportation systems. These facilities facilitate transportation and commerce, benefiting individuals and businesses by providing smooth connectivity and reducing transportation costs.
2. Education and Healthcare: Tax-funded education and healthcare systems ensure access to quality education and healthcare services for individuals. This contributes to the overall well-being and productivity of the workforce, benefiting both individuals and businesses.
3. Security and Rule of Law: Taxes support the provision of law enforcement, defense, and public safety services. A secure and stable environment is crucial for businesses to thrive and individuals to feel safe.
4. Social Welfare Programs: Tax revenues are often utilized to fund social welfare programs like unemployment benefits, welfare assistance, and pensions. These programs provide a safety net for individuals and families during times of need, contributing to social stability and reducing poverty.
5. Research and Innovation: Public funding, derived from taxation, is often channeled towards research and innovation. This can lead to technological advancements, scientific discoveries, and economic growth, benefiting both individuals and businesses.
| 5. How can taxation be used as an economic policy tool to achieve specific objectives? | |
Ans. Taxation can be used as an economic policy tool to achieve specific objectives in the following ways:
1. Fiscal Stimulus: During economic downturns, governments may lower tax rates or provide tax incentives to stimulate consumer spending, investment, and economic growth. This can help boost employment, increase business activity, and revive the economy.
2. Behavioral Modification: Taxes can be used to influence consumer behavior and discourage certain activities that are harmful to society or the environment. For example, higher taxes on tobacco products can discourage smoking, while tax incentives for renewable energy can promote environmentally-friendly practices.
3. Income Redistribution: Progressive tax systems, where higher-income individuals are taxed at a higher rate, can help reduce income inequality and promote a more equitable distribution of wealth. The tax revenue collected from the wealthy can be used to fund social welfare programs or provide assistance to low-income individuals.
4. Budget Deficit Management: Taxation plays a crucial role in managing budget deficits. Governments may increase tax rates or introduce new taxes to generate additional revenue and reduce budget deficits. Conversely, they may decrease tax rates during periods of surplus to stimulate economic growth or reduce the tax burden on individuals and businesses.
5. Encouraging Investment and Innovation: Tax policies can be designed to encourage investment in specific sectors or promote research and development. Governments may provide tax breaks or incentives for businesses to invest in infrastructure, technology, or research, fostering economic growth and innovation.
Text Transcript from Video
hello people this video will be on the
effects of taxation the impact and the
instance are before you move into this
doesn't need to differentiate between
impending incidents of our text always
member impact and once member incidents
of attacks impacts refers to the fall on
the person on which the text is first
laughing incisional text refers to who
ultimately pay for the text for example
if government or a disease entities do
levy or to impose a $3 tax on secrets
does it mean that in the market price or
rather the the selling price of the
secrets will increase by $3 which means
to say that a consumer will pay fully
for an amount of text is this true this
is referring to the incidence of text
whether we are looking at the aventure
distribution of the text button the
amount of $3 that is imposed by the
government and the impact of this case
will be on the producer themself first
so to give you a more diagram or
graphical illustration let us look at
this common levies a tax on producer so
the impact of text is actually on the
producer because it will be the first
grow of person beta test is first levy
then they were ultimately passed to the
consumer so incidents of sex refers to
on the consumers itself or rather with
the amount of text imposed so incidents
of text refers to after a moth text days
imposed by the government how much will
be paid by the consumer and how much
shall be paid by the producers therefore
we will be looking at what is meant by
incident of text here sure look at this
diagram prices quantity of a product my
supply curve our sloping downward curve
demand demand curve equilibrium point at
price P naught and the quantity produced
Q naught so when the government impose
attacks the supply curve will shift up
the supply curve will shift up by the
amount of text impulse so the rig color
supply curve is the new supply curve
with the amount of text impulse and how
do you illustrate checks on the diagram
the vertical distance between the black
color supply line and the red color
supply line will be the amount the
specific text impulse
don't be more as that it orbiters versus
in direct text impulse this is right it
is a shift of the supply curve
next thing therefore the new equilibrium
is actually at price at E 1 which the
product will be priced at P 1 so which
means to say that after the text is
imposed the product will be priced at a
higher layer price level which is priced
P 1 the price increases from P not to P
1 and the quantity produce are being
consumed in the market decreases from Q
naught to Q 1 so there is a decrease in
the equilibrium quantity and P 1 will be
the price that is paid by the consumer
so for the consumer to purchase the
product they will pay a price P 1 then
this yellow color here the whole area is
actually the text revenue generated for
the government so it is the total tax
revenue which is calculated by the
vertical distance and the amount of the
product that is being sold in the market
and P 2 P 2 will be the price order
amount that is being received by the
seller
let me repeat myself again the vertical
is distant is the amount of specific
text is being imposed therefore at price
P 1 it is the price that the consumer
will buy and purchase the product for
and at price p2 it will be the amount of
money that is received by the producer
and the yellow this that a yellow area
is the total tax revenue consumer will
pay this amount of text because
initially it is a price P not so the
difference between the price that is
being paid by them is P not P 1 and this
turquoise or green color area will be
the amount of text that is being paid by
the consumer on the other hand initially
the producer they are able to fetch a
price of the product at a price P non
but right now with the imposition of
text they receive the money at price P 2
therefore this email here will be the
amount of texts that pay by the producer
so who actually bear a heavier burden of
Taxation for this case it will be equal
by looking at the diagram the vertical
distance between P total P naught and P
not to P 1 is almost the same so it is
almost the same as the amount of a
burden of Taxation for the consumer and
producer however for a more accurate
illustration on the burden of Taxation
we will need to look at the relative
price elasticity of demand and supply it
will indicate the incidence of Tech's
to be more general first the supply
given a supply of the elasticity of
supply the more price inelastic the
demand is the greater the burden of text
on the buyer so given two demand curve a
more elastic and inelastic demand curve
when the buyers are less responsive to
buy price changes which refers to the
demand is more price inelastic though
they were actually
take a greater burden of text on the
other hand given a price elasticity of
demand the more price inelastic the
supply is the greater the burden of tax
on the sellers
so therefore in general the party-list
let more responsive to price changes
will bear a lower burden of tax so the
party who is less responsive to price
changes will bear a greater burden or
Tech's so sure I look at this diagram
given a supply on elasticity of supply
which it is which is similar for both
curve the more price inelastic demand is
the greater the burden of tax on the
bias
so shall we prove this so on the diagram
that's on our left it is a more elastic
demand curve and under on the right it
is a more inelastic demand curve let's
say the texts impose for to market is
the same therefore the supply curve will
shift up by the amount of text imposed
so the vertical distance is the same but
you will realize that for a diagram on
the left the price increase in the price
is from P not to P one is smaller than
the increase of the price from on the
right hand side given the new
equilibrium point P 2 will be the price
or rather the amount the consume the
producer will receive so consumer
incidence of text per unit is indicated
by the vertical distance P naught P 1
producer incidence of text per unit is
indicated by the distant P 2 P naught
and therefore in this diagram you
realize that for inelastic demand curve
which is looking at the diagram on the
right the consumer will bear a greater
burden of text
likewise shall I look at the next case
given that the demon the price
elasticity of demand is the same for to
diagram the mob price in elastic the
supply curve is the greater the burden
our text on the seller so the supply
curve here is different on the left it
is a more elastic supply curve on the
right it is a more in elastic supply
curve so both of my cover shift up but
vertically by the equal amount of text
impose and and as you can see from the
diagram on the left the new price lever
is a p1 yes for both diagram and the
selling or rather the price is received
by the producer but we at price p2 and
she'll look at the same thing incidence
of text on the consumer it will be P 1 P
not P 1 on the other hand producer
incidence of thanks per unit will be P
not P 2 P not in on the diagram itself
the mall price in elastic which is
looking at the diagram on the right the
greater a bundle of text under seller
which is indicated by a greater distance
or the difference between P 2 and P not
another guy on the right as compared to
the diagram on the left so that's all
for an impact incidence of indirect
taxes on consumer and producer in the
tutorial will cover true using K star
delight of echoing class in the market
thank you
effects of taxation the impact and the
instance are before you move into this
doesn't need to differentiate between
impending incidents of our text always
member impact and once member incidents
of attacks impacts refers to the fall on
the person on which the text is first
laughing incisional text refers to who
ultimately pay for the text for example
if government or a disease entities do
levy or to impose a $3 tax on secrets
does it mean that in the market price or
rather the the selling price of the
secrets will increase by $3 which means
to say that a consumer will pay fully
for an amount of text is this true this
is referring to the incidence of text
whether we are looking at the aventure
distribution of the text button the
amount of $3 that is imposed by the
government and the impact of this case
will be on the producer themself first
so to give you a more diagram or
graphical illustration let us look at
this common levies a tax on producer so
the impact of text is actually on the
producer because it will be the first
grow of person beta test is first levy
then they were ultimately passed to the
consumer so incidents of sex refers to
on the consumers itself or rather with
the amount of text imposed so incidents
of text refers to after a moth text days
imposed by the government how much will
be paid by the consumer and how much
shall be paid by the producers therefore
we will be looking at what is meant by
incident of text here sure look at this
diagram prices quantity of a product my
supply curve our sloping downward curve
demand demand curve equilibrium point at
price P naught and the quantity produced
Q naught so when the government impose
attacks the supply curve will shift up
the supply curve will shift up by the
amount of text impulse so the rig color
supply curve is the new supply curve
with the amount of text impulse and how
do you illustrate checks on the diagram
the vertical distance between the black
color supply line and the red color
supply line will be the amount the
specific text impulse
don't be more as that it orbiters versus
in direct text impulse this is right it
is a shift of the supply curve
next thing therefore the new equilibrium
is actually at price at E 1 which the
product will be priced at P 1 so which
means to say that after the text is
imposed the product will be priced at a
higher layer price level which is priced
P 1 the price increases from P not to P
1 and the quantity produce are being
consumed in the market decreases from Q
naught to Q 1 so there is a decrease in
the equilibrium quantity and P 1 will be
the price that is paid by the consumer
so for the consumer to purchase the
product they will pay a price P 1 then
this yellow color here the whole area is
actually the text revenue generated for
the government so it is the total tax
revenue which is calculated by the
vertical distance and the amount of the
product that is being sold in the market
and P 2 P 2 will be the price order
amount that is being received by the
seller
let me repeat myself again the vertical
is distant is the amount of specific
text is being imposed therefore at price
P 1 it is the price that the consumer
will buy and purchase the product for
and at price p2 it will be the amount of
money that is received by the producer
and the yellow this that a yellow area
is the total tax revenue consumer will
pay this amount of text because
initially it is a price P not so the
difference between the price that is
being paid by them is P not P 1 and this
turquoise or green color area will be
the amount of text that is being paid by
the consumer on the other hand initially
the producer they are able to fetch a
price of the product at a price P non
but right now with the imposition of
text they receive the money at price P 2
therefore this email here will be the
amount of texts that pay by the producer
so who actually bear a heavier burden of
Taxation for this case it will be equal
by looking at the diagram the vertical
distance between P total P naught and P
not to P 1 is almost the same so it is
almost the same as the amount of a
burden of Taxation for the consumer and
producer however for a more accurate
illustration on the burden of Taxation
we will need to look at the relative
price elasticity of demand and supply it
will indicate the incidence of Tech's
to be more general first the supply
given a supply of the elasticity of
supply the more price inelastic the
demand is the greater the burden of text
on the buyer so given two demand curve a
more elastic and inelastic demand curve
when the buyers are less responsive to
buy price changes which refers to the
demand is more price inelastic though
they were actually
take a greater burden of text on the
other hand given a price elasticity of
demand the more price inelastic the
supply is the greater the burden of tax
on the sellers
so therefore in general the party-list
let more responsive to price changes
will bear a lower burden of tax so the
party who is less responsive to price
changes will bear a greater burden or
Tech's so sure I look at this diagram
given a supply on elasticity of supply
which it is which is similar for both
curve the more price inelastic demand is
the greater the burden of tax on the
bias
so shall we prove this so on the diagram
that's on our left it is a more elastic
demand curve and under on the right it
is a more inelastic demand curve let's
say the texts impose for to market is
the same therefore the supply curve will
shift up by the amount of text imposed
so the vertical distance is the same but
you will realize that for a diagram on
the left the price increase in the price
is from P not to P one is smaller than
the increase of the price from on the
right hand side given the new
equilibrium point P 2 will be the price
or rather the amount the consume the
producer will receive so consumer
incidence of text per unit is indicated
by the vertical distance P naught P 1
producer incidence of text per unit is
indicated by the distant P 2 P naught
and therefore in this diagram you
realize that for inelastic demand curve
which is looking at the diagram on the
right the consumer will bear a greater
burden of text
likewise shall I look at the next case
given that the demon the price
elasticity of demand is the same for to
diagram the mob price in elastic the
supply curve is the greater the burden
our text on the seller so the supply
curve here is different on the left it
is a more elastic supply curve on the
right it is a more in elastic supply
curve so both of my cover shift up but
vertically by the equal amount of text
impose and and as you can see from the
diagram on the left the new price lever
is a p1 yes for both diagram and the
selling or rather the price is received
by the producer but we at price p2 and
she'll look at the same thing incidence
of text on the consumer it will be P 1 P
not P 1 on the other hand producer
incidence of thanks per unit will be P
not P 2 P not in on the diagram itself
the mall price in elastic which is
looking at the diagram on the right the
greater a bundle of text under seller
which is indicated by a greater distance
or the difference between P 2 and P not
another guy on the right as compared to
the diagram on the left so that's all
for an impact incidence of indirect
taxes on consumer and producer in the
tutorial will cover true using K star
delight of echoing class in the market
thank you
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Nov 16, 2024 Last updated |
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