Lenka Kopečková len.k@mail.muni.cz Introduction to Public finance *Public finance *Financial operations between public institutions and other subjects (citizens, households, componaies, non-profit organizations etc.) *Yet not any united definition * * Introduction to public finance *Public Finance * Financial operations, relations and its tools *Public sector *Part of national economy *Financed from public budgets Public finance X Public sector * Public expenditures * Public revenues Public finance *Tax revenues *Capital revenues *Subsidies *Other Public revenues *Tax revenues as a percentage of GDP = tax quota *(simple, compound) * * *Eurostat (Year 2011) *Worldbank * * Tax revenues Source: Eurostat Eurostat: http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Tax_revenue_statistics Worldbank: http://data.worldbank.org/indicator/GC.TAX.TOTL.GD.ZS/countries/CZ-FR-DE-US-ES-PL-GR?display=graph Structure of tax revenues * Source: Eurostat http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Tax_revenue_statistics *e. g. from European Union * Subsidies Total budget expenditure in euros for the whole period 2007-2013 per capita (2007 population figures) are given below. Negative numbers indicate net contributors, positive numbers indicate net recipients. Source: http://www.openeurope.org.uk *Revenues from selling state property *Mostly quite small amounts *Irregular, one-time revenue * Capital revenues *Revenues from services provided to public (e. g. Highways) *Penalties *Revenues from selling non-capital property *… Other revenues *Part of the GDP which is related to realization of government functions * *Part of the GDP which is consumed rather collectively than privately * Public expenditures *Indicitors of size of the public expenditures * percentage of public expenditures on GDP (source: worldbank) * * * * * * * * *percentage to the increase of other economic indicators etc… * * Public expenditures Worldbank: http://data.worldbank.org/indicator/GC.XPN.TOTL.GD.ZS/countries/CZ-FR-DE-US-ES-PL-GR?display=graph *Allocation *Stabilization *Redistribution * * Government functions *Providing services in situations where private sector does not generate sufficient quantity or quality of these services *e. g. Education, health care system… * * Allocative function *„Fair“ allocation of sources * *Lorenz curve measuring division of income in the society * *Gini coefficient *- 0 (total equality) *- 1 (total inequality) * * * * Redistributive function * Gini keoficient *Public and private social expenditures 2007 Social expenditures 46325231Chart_SOCX_2010 Source: oecd *Tools *Revenues (Taxes – e. g. Progressive taxes) *Expenditures *Subsidies *Transfers * Redistributive function *Tools *Monetary (national banks) *Discount rate (interest rates of national banks) *Reserve requirements (http://en.wikipedia.org/wiki/Reserve_requirement) *Open market operations * *Fiscal *Public expenditures (http://en.wikipedia.org/wiki/Government_spending) *Public revenues (taxes) *Budgeting of deficit * * Stabilization Trends in public expenditures *Alfred Wagner – 1890 *„Togother with growing income in economics grows the size of public sector“ * *Why? *Technological changes (e. g. health care) *Social and demographic factors *Threshold effect (wars, floods…) *Political reasons * * * * * * * Trends in public finance *Changes in population –> pension schemes…?!? Changes in population Threshold effect Government spending Time Threshold Begining of the war, crisis etc. End of the war, crisis etc.. *Greece… *Czech republic – social security system, health care system… *Your country…? Political reasons *Mandatory expenditures *expenditures, which has to be paid and can’t be changed (are determined by law) *e.g. retirments *About 60% of public expenditures * *Quazi-mandatory expenditures *Are not determined by law, but goverment is highly expected to pay them ( *e. g. Salaries of state employees *About 20% of public expenditures Mandatory and quazi-mandatory expenditures ...thank you for your attention