Lesson Flashcards: Components of Public Finance Economics

A principle that states that public expenditure should be structured in a way that maximizes its benefits to society as a whole

A canon of taxation stating that taxes should be distributed proportionally according to each individual’s ability to pay, resulting in an equitable burden for each taxpayer

A principle that states that public expenditure should be structured in a way that minimizes waste

A canon of taxation stating that the amount of tax an individual taxpayer will be charged in a given time period and the manner of payment should be clearly and consistently defined in advance for the taxpayer

A principle that states that all revenues and expenses should be individually recorded in the public budget without any links or dependencies or notional offsetting of one against another

The government’s income, largely consisting of the public sector’s surplus, public debt, fees, and taxes

The set of fiscal activities of the government, including its revenues, spending, and budgeting

The legally required payments for all participants of the economy and the largest source of public revenue

A tax system in which all individuals pay the same percentage of their incomes as a tax

Fiscal spending made by municipal (local) governments, including that for education, emergency services, and city parks

Taxes that are paid directly to the government by the individuals bearing the tax burdens (e.g., income and property taxes)

A principle stating that no public expenditure may occur without prior approval (sanction) by appropriate government officials

The canon of equity, the canon of economy, the canon of certainty, and the canon of convenience

Fiscal spending made by the national (central) government, including that for national defense and the construction of national infrastructure

A tax system in which individuals with higher incomes pay a greater percentage of their incomes as a tax

A principle stating that the public budget cycle should repeat each fiscal year, being drawn up, approved, executed, and reviewed in turn

Public sector’s surplus, public debt, fees, and taxes

A principle stating that both the public expenditures and public revenues should be contained in one document in order to provide a comprehensive view of the government’s activity

A canon of taxation stating that taxes should be designed to minimize the cost of collection

In the economic sense, a mechanism that aims to prevent the public sector from seeking profits for specific groups of individuals

A canon of taxation stating that the collection of taxes should be done in a manner that is simple and uncomplicated for taxpayers

A budget where a government’s income matches its expenses

Monetary spending by the government aimed at satisfying the needs of society, such as infrastructure, health, education, and transfer payments

The officials in charge of creating laws and who are elected by citizens to represent the will of those citizens

Taxes whose burdens are passed onto another entity or individual (e.g., sales tax and value added tax, where a merchant is taxed on the value of goods sold in their store, but the consumer is the one who pays the tax)

Proposal, approval, execution, and audit

The principle of annuality, the principle of unity, the principle of universality, and the principle of a balanced budget