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    Introduction of Public Fiscal Administration

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    mitzi samson
    1) Public fiscal administration involves generating government revenue and handling expenditures to fund various government functions like education, health, defense, and economic policies. 2) Fiscal administration must balance meeting public demands with efficient allocation of financial resources, though approaches vary by country. 3) A key issue is ensuring revenues and expenditures are properly managed through accounting, auditing, and budgeting to safeguard public funds and allow citizens to oversee how money is used.

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    Introduction of Public Fiscal Administration

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    mitzi samson
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    1) Public fiscal administration involves generating government revenue and handling expenditures to fund various government functions like education, health, defense, and economic policies. 2) Fiscal administration must balance meeting public demands with efficient allocation of financial resources, though approaches vary by country. 3) A key issue is ensuring revenues and expenditures are properly managed through accounting, auditing, and budgeting to safeguard public funds and allow citizens to oversee how money is used.

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    1) Public fiscal administration involves generating government revenue and handling expenditures to fund various government functions like education, health, defense, and economic policies. 2) Fiscal administration must balance meeting public demands with efficient allocation of financial resources, though approaches vary by country. 3) A key issue is ensuring revenues and expenditures are properly managed through accounting, auditing, and budgeting to safeguard public funds and allow citizens to oversee how money is used.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    2K views5 pages

    Introduction of Public Fiscal Administration

    Uploaded by

    mitzi samson
    1) Public fiscal administration involves generating government revenue and handling expenditures to fund various government functions like education, health, defense, and economic policies. 2) Fiscal administration must balance meeting public demands with efficient allocation of financial resources, though approaches vary by country. 3) A key issue is ensuring revenues and expenditures are properly managed through accounting, auditing, and budgeting to safeguard public funds and allow citizens to oversee how money is used.

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    of 5

    Lesson 1

    FUNDAMENTAL CONCEPTS OF PUBLIC ADMINISTRATION

    Governments perform multifarious functions like maintaining peace and order,


    defence, quality education for the citizens, health, diplomatic relations, etc. Added
    to these is its vital role in macro and microeconomics like fighting economic depression,
    inflation, stagflation and unemployment, as well as poverty alleviation. Fiscal systems
    are primarily focused on generating revenues and handling expenditures of political
    agencies. But the inside-out of environments of these systems are in constant state of
    flux. As the needs for funds become more urgent, as more demands are put on
    government operations, concentration on sources of revenue gets more urgent. Its
    relevance and value has gained the long over- due consideration. Amidst these
    developments, students of public administration, administrators and administrations
    must seriously understand the operation of public fiscal administration.

    The need for economic growth and change in the quality of life makes government
    plan of action unavoidable.

    ▪ Public Fiscal Administration has to focus on meeting demands of constitue


    nts and to parallel the same with efficient efforts in putting up money resources
    in its delivery systems. Fiscal administration depends largely upon the general
    political organization. The type of administration and ideology vary from country
    to country, thus financial administration would somehow be affected. But the
    demand for sound finance management is compiled within every country, no
    matter what the form of government is.

    The primary issue remains whether the revenues and expenditures are
    properly handled. The citizens have a right to demand the most capable management
    of public funds. Government expenditures are eventually people’s burdens. The more
    the funds are squandered, the greater are the burdens upon the citizens. Graft
    and misappropriation of funds in government demand a stricter account of the
    services performed by officials. The requirement to keep watch on revenues and
    expenditures through the skilled accountants and auditors becomes a must. Proper
    accounting and audit of government resources are prime methods of
    safeguarding public funds. A budget system that finally implements the plan of
    government operation offers the public a better opportunity to know what and how it is
    used.

    A sound public finance creates sound government. A sound government


    operates sound finance.

    Science and Art of Public Finance

    Science is the systematic study that looks into causal relationship between event
    s and facts. On this basis, public finance may be considered a science when
    it adopts the following features: ·
    ▪ scientific methods of investigation are applied
    ▪ principles are objective and measurable ·
    ▪ its facts and principles are orderly arranged ·
    ▪ a certain class of economics and political phenomena are foreseen
    and explained ·
    ▪ human knowledge is definite and limited

    ➢ The study of public finance is a positive science. It offers information about


    the problems of government revenues and expenditures, the composition of
    budget, and the incidence of fiscal operations. The study of public finance tells
    the kinds of taxes, constant rise in government expenditure, increase of
    public debt, etc. All these are facts and knowledge. But such study prescribes
    standards and norms like the standards on the different kinds of tax.

    ➢ Public Finance becomes an art when the output is learned and applied, or
    when common sense and practicability are put into use whenever public
    resources are generated, allocated and spent.

    Public Fiscal Administration Relationship with Other Sciences

    a. Economics is the science which deals with the management of scarce


    resources to satisfy human wants. Public Fiscal Administration is the science
    which deals with satisfying the needs of the citizens. The same economic laws
    that govern the problem of the distribution of wealth affect the principles of
    Public Fiscal Administration in dealing with government ‘s generation of
    revenues and expending the same.

    b. Ethics deals with good and bad behaviour of individuals. This is also observed
    in fiscal principles.

    c. History provides lessons of the past. It also provides facts, figures, and
    illustrations of what and how problems in the government were treated which
    maybe essential in the formulation of new fiscal policies.

    d. Jurisprudence and Law the fundamental law of the country is the basis of
    taxes imposed and funds allocated. Rights and obligations of people are
    defined by laws. These have direct bearing on how fiscal decisions may be
    made.

    e. Political Science revenues are secured to carry out government objectives.


    Officials are concerned about the exaction and use of funds since the public will
    always visualize with disfavour any misuse of public funds.

    f. Psychology most of the problems of public finance are human problems which
    is the subject matter of psychology. For example, increase in the tax on the
    individual ‘s income will adversely affect the spirit of risk taking and makes
    individual investments suffer.

    g. Sociology is concerned with the results of government activities and compares


    these results with what has been accomplished in terms of outcome on the
    society. The problems of social reform and the issues of Public Fiscal
    Administration are inseparably related.

    h. Statistics information on income, expenditure, debt, financial health of the


    public finances is prepared in the form of statistical data. Public Fiscal Statistics.
    Information on income, expenditure, debt, financial health of the public finances
    is prepared in the form of statistical data. Public Fiscal.

    Public Finance and Public Fiscal Administration these terms are usually
    interchangeable. Public finance is traditionally considered a branch of the field of
    economics with specific reference to legal and constitutional aspect of revenue sharing
    arrangements among spending government units. Public Fiscal Administration is a
    sub-field of Public Administration where issues are examined not only from the point
    of view of economics but from politics and administration as well.

    Public Finance is a much older label than Public Fiscal Administration in the practice
    of government and the academics. But the focus has not changed, it is still on
    government delivering public goods and services to the people with the use of money
    collected as taxes or borrowed from legal sources either domestic or international.

    Distinction between Public Finance and Private Finance public finance is the study
    of income, expenditure, borrowing and financial policy and administration of the
    government. On the other hand, private finance investigates income, expenditure,
    borrowing and financial management of individuals or private corporations.

    Public Finance Private Finance


    Adjustment of income to Adjustment of expenditure to
    Expenditure income
    Popular control Corporate control
    Elastic resources Limited resources
    Resource mobilisation through No such power
    coercive power
    Tendency towards deficit Tendency towards balanced Budgets
    Direction of expenditure towards Towards profit maximisation
    public service

    Nature of Financial Administration

    a. Traditional View
    Advocates of this view conceive financial administration as a total of activities
    undertaken in pursuit of generation, regulation and distribution of monetary
    resources needed for the sustenance and growth of public organisations. They
    emphasise upon that set of administrative functions in a public organisation
    which relate to an arrangement of flow of funds as well as to regulating
    mechanisms and processes which ensure proper and productive utilisation of
    these funds. When one looks at this view from systems perspective, it
    represents an integral sub-system of supportive system. A financial
    administrator shoulders responsibility for ensuring adequate financial backing
    for running public organisation in the most efficient manner. His job is to plan,
    programme, organise and direct all financial activities in public organisations to
    achieve efficient implementation of public policy

    b. Modem view
    The modem view considers financial administration as integral part of the
    overall management process of public organisations rather than one of raising
    and disbursing public funds. It includes all the activities of all persons engaged
    in public administration, for quite obviously almost every public official takes
    decisions which are bound to have some direct or indirect consequences of
    financial nature. Further, it rejects the value-neutral stand of the traditional
    theory. It combines three prominent theories of public finance, viz., the socio-
    political theory as expounded by Wagner, Edgeworth and Pigou, the functional
    theory of Keynesian perspective and activating view of modem public finance
    theorists. According to this view financial administration has the following roles.

    ▪ Equalising Role: Under this role financial administration seeks to


    demolish the inequalities of wealth. It seeks, through fiscal policies, to
    transfer income from the affluent to the poor.
    ▪ Functional Role: Under normal circumstances the economy cannot
    function on its own. Under this role, financial administration seeks to
    ensure, through taxation, public expenditure and public debt, and proper
    functioning of the economy. It evolves policy instruments to maintain
    high economic growth and full employment.
    ▪ Activating Role: Under this role financial administration involves the
    study of such steps that will facilitate a smooth and rapid flow of
    investment and its optimal allocation to increase the volume of national
    income.
    ▪ Stabilising Role: Under this role, the objective of financial administration
    is the stabilisation of price level and inflationary trends through fiscal as
    well as monetary policies.
    ▪ Participatory Role: According to this view, financial administration
    involves formulation and execution of policies for making the state a
    producer of both public and private goods with the objective of
    maximising social welfare of the community. It also seeks to promote
    economic development through direct and indirect participation of the
    State.
    ACTIVITY:

    Answer questions

    1. Why is the study of Public Fiscal Administration important? Show examples

    2. Why is Public Finance considered both a science and an art? Show example

    3. In own perspective, what is accountability?

    Next topic:
    ▪ Public Fiscal Administration history and evolution as a study
    ▪ Government Function
    ▪ Development of Public Fiscal Administration in the Philippines

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