2008 Asiyah Kassim

7
Taxation in Malaysia
Def: A tax is a financial charge or other levy imposed on an
individual or a legal entity by the government.
Def: The compulsory payments associated with certain
activities.
Revenues collected through taxation are used to purchase the
inputs necessary to produce government-supplied goods and
services or to redistribute purchasing power among citizens.
Taxes consist of direct tax or indirect tax.
It can be considered as the life blood of public finance as tax
is one of the most vital resources for public revenue.
Def: A tax is a financial charge or other levy imposed on an
individual or a legal entity by the government.
Def: The compulsory payments associated with certain
activities.
Revenues collected through taxation are used to purchase the
inputs necessary to produce government-supplied goods and
services or to redistribute purchasing power among citizens.
Taxes consist of direct tax or indirect tax.
It can be considered as the life blood of public finance as tax
is one of the most vital resources for public revenue.
Taxation in Malaysia
The Principles
The Principles
Ability-to-pay
principle
Ability-to-pay
principle
Benefit principle
Benefit principle
Horizontal
Equity
Horizontal
Equity
Vertical Equity
Vertical Equity
This principle maintains that taxes should be distributed
according to the capacity of taxpayers to pay them. i.e.
citizens with greater ability to earn income, should be taxed
more heavily than those with less capacity to earn.
By using this approach, the problem of distributing tax shares
is viewed as independent of individual marginal benefits
received from government activities.
It requires some collective agreement concerning an
equitable distribution of the taxes among citizens.
Individual evaluations of the ability-to-pay are likely to differ
among citizens whose preferences differ.
Related: notions of horizontal and vertical equity.
This principle maintains that taxes should be distributed
according to the capacity of taxpayers to pay them. i.e.
citizens with greater ability to earn income, should be taxed
more heavily than those with less capacity to earn.
By using this approach, the problem of distributing tax shares
is viewed as independent of individual marginal benefits
received from government activities.
It requires some collective agreement concerning an
equitable distribution of the taxes among citizens.
Individual evaluations of the ability-to-pay are likely to differ
among citizens whose preferences differ.
Related: notions of horizontal and vertical equity.
Ability-to-pay
principle
Ability-to-pay
principle
Horizontal equity is achieved when individuals of the same
economic capacity (measured for example by income) pay the
same amount of taxes per year
Horizontal equity is achieved when individuals of the same
economic capacity (measured for example by income) pay the
same amount of taxes per year
Horizontal
Equity
Horizontal
Equity
Vertical Equity
Vertical Equity
Vertical equity is accomplished when individuals of differing
economic ability pay annual tax bills that differ according to
some collectively chosen notion of fairness.
Vertical equity is accomplished when individuals of differing
economic ability pay annual tax bills that differ according to
some collectively chosen notion of fairness.
The benefit principle argues that the means of financing
government-supplied goods and services should be linked to
the benefits that citizens receive from government.
From the point of view of those who favor the benefit
approach, fees and charges are ideal forms of government
finance. Charges, like prices, distribute the costs of goods and
services among those who consume them.
If it is successfully implemented, it links the cost per unit of
government-provided services with the marginal benefits of
those services.
A distribution of tax shares per unit of a public good that
reflects marginal benefits received by taxpayers induces
individual citizens to vote for the efficient output of that good.
The benefit principle argues that the means of financing
government-supplied goods and services should be linked to
the benefits that citizens receive from government.
From the point of view of those who favor the benefit
approach, fees and charges are ideal forms of government
finance. Charges, like prices, distribute the costs of goods and
services among those who consume them.
If it is successfully implemented, it links the cost per unit of
government-provided services with the marginal benefits of
those services.
A distribution of tax shares per unit of a public good that
reflects marginal benefits received by taxpayers induces
individual citizens to vote for the efficient output of that good.
Benefit principle
Benefit principle
Most government-provided goods and services result in
collectively consumed benefits that are difficult to assign to
individuals. The only way to determine such benefits would be
to ask individual citizens how much extra units of the good or
service are worth to them.
If individuals know that their share of the financial burden
depends on their declaration of benefits, they might have
little or no incentive to declare their true benefits.
In some cases, the benefits from government-provided
services can be correlated with a particular economic activity,
which is taxed so that the amount paid varies according to
benefits received by taxpayers.
Most government-provided goods and services result in
collectively consumed benefits that are difficult to assign to
individuals. The only way to determine such benefits would be
to ask individual citizens how much extra units of the good or
service are worth to them.
If individuals know that their share of the financial burden
depends on their declaration of benefits, they might have
little or no incentive to declare their true benefits.
In some cases, the benefits from government-provided
services can be correlated with a particular economic activity,
which is taxed so that the amount paid varies according to
benefits received by taxpayers.
Benefit principle
Benefit principle
Taxation Rates
Types of Taxation Principles:-
(i) Proportional Taxation
(ii) Regressive Taxation
(iii)Progressive Taxation
Types of Taxation Principles:-
(i) Proportional Taxation
(ii) Regressive Taxation
(iii)Progressive Taxation
Proportional
Taxation
Proportional
Taxation
Taxes all household income, and possibly
corporate profits as well, at the same marginal
rate.
Also called flat tax
A flat tax usually refers to the taxation of
incomes but can be applied to consumption.
Taxes all household income, and possibly
corporate profits as well, at the same marginal
rate.
Also called flat tax
A flat tax usually refers to the taxation of
incomes but can be applied to consumption.
Taxation in Malaysia
Regressive
Taxation
Regressive
Taxation
The tax as a percentage of income falls as income
rises.
A regressive tax is a tax which takes a larger
percentage of income from people whose income
is low.
A regressive tax places proportionately more of a
burden on those with lower incomes. Regressive
taxes, as opposed to progressive taxes, are more
burdensome on lower-income individuals than on
higher-income individuals and corporations.
The tax as a percentage of income falls as income
rises.
A regressive tax is a tax which takes a larger
percentage of income from people whose income
is low.
A regressive tax places proportionately more of a
burden on those with lower incomes. Regressive
taxes, as opposed to progressive taxes, are more
burdensome on lower-income individuals than on
higher-income individuals and corporations.
Taxation in Malaysia
Progressive
Taxation
Progressive
Taxation
Practised by Malaysia
It is imposed so that the tax rate increases as the amount to which the
rate is applied increases.
It can be applied to any type of tax. It is frequently applied in
reference to income taxes, where people with more disposable income
pay a higher percentage of that income in tax than do those with less
income. In Malaysia, the highest rate taxation is 28%
The term progressive refers to the way the rate progresses from low to
high.
Over time the term has also been associated with the concepts of
modern or liberal.
Practised by Malaysia
It is imposed so that the tax rate increases as the amount to which the
rate is applied increases.
It can be applied to any type of tax. It is frequently applied in
reference to income taxes, where people with more disposable income
pay a higher percentage of that income in tax than do those with less
income. In Malaysia, the highest rate taxation is 28%
The term progressive refers to the way the rate progresses from low to
high.
Over time the term has also been associated with the concepts of
modern or liberal.
Taxation in Malaysia
Characteristics of
Progressive Taxation
Characteristics of
Progressive Taxation
Equitable taxation
The higher the income, the higher
the tax base
Gradual Increase
Equitable taxation
The higher the income, the higher
the tax base
Gradual Increase
Figure of Progressive Tax Base
0%
5%
10%
15%
20%
25%
30%
RM15,000 RM20,000 RM30,000 RM50,000
Income
T
a
x

R
a
t
e
Tax Rate
Notes:
10% = RM1,500
15% = RM3,000
20% = RM6,000
28% = RM14,000
Notes:
10% = RM1,500
15% = RM3,000
20% = RM6,000
28% = RM14,000
Taxation in Malaysia
History /
Background
History /
Background
The introduction of income tax in Malaya during the early part of the
twentieth century was clouded with uncertainty as it faced strong
opposition from the public.
For instance, the draft bill for imposing indirect tax on income that was
introduced by the Straits Settlements comprising Singapore, Malacca and
Penang Legislative Council in 1910 was withdrawn the following year as
it did not receive the support of the tax paying public.
Such a hostile reception characterized subsequent attempts ranging
from 1920, 1941 and 1945 to introduce a tax system until the introduction
of Income Tax in its modern form in 1948 and over the year there is a
major development and growth of law and administration of taxation to
suit with the current trends.
The introduction of income tax in Malaya during the early part of the
twentieth century was clouded with uncertainty as it faced strong
opposition from the public.
For instance, the draft bill for imposing indirect tax on income that was
introduced by the Straits Settlements comprising Singapore, Malacca and
Penang Legislative Council in 1910 was withdrawn the following year as
it did not receive the support of the tax paying public.
Such a hostile reception characterized subsequent attempts ranging
from 1920, 1941 and 1945 to introduce a tax system until the introduction
of Income Tax in its modern form in 1948 and over the year there is a
major development and growth of law and administration of taxation to
suit with the current trends.
Taxation in Malaysia
History /
Background
History /
Background
Government authorities generally impose two broad types of taxes,
namely direct and indirect taxation.
In Malaysia, the responsibility to administer and collect direct taxation
lies with the Director of Inland Revenue while indirect taxation is
administered by the Director General of the Royal Customs and Excise
Department.
In Malaysia, the law of tax is governed under Article 96 of Federal
Constitution.
Tax revenue will continue to be the main source of income for the
government of Malaysia as the country continues to experience economic
growth.
Government authorities generally impose two broad types of taxes,
namely direct and indirect taxation.
In Malaysia, the responsibility to administer and collect direct taxation
lies with the Director of Inland Revenue while indirect taxation is
administered by the Director General of the Royal Customs and Excise
Department.
In Malaysia, the law of tax is governed under Article 96 of Federal
Constitution.
Tax revenue will continue to be the main source of income for the
government of Malaysia as the country continues to experience economic
growth.
Taxation in Malaysia
Background
Background
In 1997, 46.4 percent of the total
Federal Government revenue was
from direct taxes and the
remainder was from indirect
taxes (35.3 percent) and non-tax
revenues (18.3 percent) (Table 1).
Examples of non-tax revenues
include royalties from the
petroleum sector, collections
from licenses, permits, road tax
and registration fees.
In 1997, 46.4 percent of the total
Federal Government revenue was
from direct taxes and the
remainder was from indirect
taxes (35.3 percent) and non-tax
revenues (18.3 percent) (Table 1).
Examples of non-tax revenues
include royalties from the
petroleum sector, collections
from licenses, permits, road tax
and registration fees.
Table 1
Federal Government Revenue (1997)
100.0 65,736
Total
Revenue
18.3 12.065
Non-Tax
Revenue
35.3 23,195
Indirect
Taxes
46.4 30,476
Direct
Taxes
Percentage
RM
(Million)
Source: Bank Negara Malaysia Annual Report (1997)
Taxation in Malaysia
Background
Background
It is interesting to note that
personal income tax is the second
largest source of direct taxes in
Malaysia, following corporate
tax. In 1997 for instance, corporate
income tax was 54.8 percent of
total direct taxes followed by
personal income tax (21.1 percent)
(Table 2).
It is interesting to note that
personal income tax is the second
largest source of direct taxes in
Malaysia, following corporate
tax. In 1997 for instance, corporate
income tax was 54.8 percent of
total direct taxes followed by
personal income tax (21.1 percent)
(Table 2).
Table 2
Source of Direct Taxes (1997)
100.0 30,476
Total Direct
Taxes
11.4 3,498
Other
Direct
Taxes
12.7 3,861
Petroleum
Income Tax
21.1 6,429
Personal
Income Tax
54.8 16.688
Corporate
Tax
Percentage
RM
(Million)
Source: Bank Negara Malaysia Annual Report (1997)
Taxation in Malaysia
Background
Background
Personal income tax in Malaysia is imposed on individuals either
employed in their personal capacity or as individuals operating
business as sole proprietors and also as partners in any partnership.
Examples of other direct taxes include film hire duty, stamp duty,
real property gains tax and revenue from the International Offshore
Financial Centre.
While under the Income Tax Act, income that is subject to tax not
only includes business and employment income but also unearned
income such as rent, dividend, interest and royalty.
Personal income tax in Malaysia is imposed on individuals either
employed in their personal capacity or as individuals operating
business as sole proprietors and also as partners in any partnership.
Examples of other direct taxes include film hire duty, stamp duty,
real property gains tax and revenue from the International Offshore
Financial Centre.
While under the Income Tax Act, income that is subject to tax not
only includes business and employment income but also unearned
income such as rent, dividend, interest and royalty.
Taxation in Malaysia
1. This principle of taxation is equitable, fair and just as the rate
imposed is based on the principle of ability to pay in which those
who received more will have to pay more.
2. It is a powerful tool to reduce inequalities of income due to the
principle that the rich will pay more taxes and that it is able to
narrow down or reduce the gap between the rich and the poor.
3. Other than that, progressive taxation can also act as a generator to
reduce the rate of poverty by distribution of income. Besides, this
type of taxation can be considered as a welfare and morally type of
taxation where the rich which have to pay more is considered as
financing the poor.
1. This principle of taxation is equitable, fair and just as the rate
imposed is based on the principle of ability to pay in which those
who received more will have to pay more.
2. It is a powerful tool to reduce inequalities of income due to the
principle that the rich will pay more taxes and that it is able to
narrow down or reduce the gap between the rich and the poor.
3. Other than that, progressive taxation can also act as a generator to
reduce the rate of poverty by distribution of income. Besides, this
type of taxation can be considered as a welfare and morally type of
taxation where the rich which have to pay more is considered as
financing the poor.
Merits
Merits
Taxation in Malaysia
4. It is more economical as the cost of collection does not rise with the
rate of taxes whereby under this system, even though the rate
increases, the payment is still the same and yet it is still lowas
compared to other countries for example in Denmark where all the
citizens will have to forego 50% of their income for tax purpose.
5. It is more productive because good revenues automatically will
increase with the increase in economic activities. For instance in a
period of boom of prosperity where major business making much
profits, they will able to pay more of the taxes and therefore this will
increase the national income.
4. It is more economical as the cost of collection does not rise with the
rate of taxes whereby under this system, even though the rate
increases, the payment is still the same and yet it is still lowas
compared to other countries for example in Denmark where all the
citizens will have to forego 50% of their income for tax purpose.
5. It is more productive because good revenues automatically will
increase with the increase in economic activities. For instance in a
period of boom of prosperity where major business making much
profits, they will able to pay more of the taxes and therefore this will
increase the national income.
Merits
Merits
Taxation in Malaysia
1. The system is difficult to understand as it is possible of having
numerous progression and as the consequences, it would be difficult
to calculate the amount of tax to be paid. Furthermore, it is difficult
for the public to understand when there is a rise in their income as
the rate is slightly confusing when salary increases.
2. It discourage savings, where it is possible that only the rich will be
able to save as compared to the middle income in which their return
home pay or after-taxed pay is only in a small amount. And yet this
will jeopardize the future savings of the lower and middle income.
1. The system is difficult to understand as it is possible of having
numerous progression and as the consequences, it would be difficult
to calculate the amount of tax to be paid. Furthermore, it is difficult
for the public to understand when there is a rise in their income as
the rate is slightly confusing when salary increases.
2. It discourage savings, where it is possible that only the rich will be
able to save as compared to the middle income in which their return
home pay or after-taxed pay is only in a small amount. And yet this
will jeopardize the future savings of the lower and middle income.
Demerits
Demerits
3.This type of taxation does not reward hard work, where looking in
details, it is quite unfair and unjust for the diligent and hardworking
people who try hard to accumulate wealth through his great efforts.
Simply stated that, the person has put so many efforts to earn much
but the money earned will have to be foregone in order to finance
other people and things which not directly will benefit the tax payers.
Therefore, this system is actually demotivate workers from working
harder.
4. This system also leads to several moral hazards where businesses or
individuals who refuse to comply with this tax, will cheat in terms of
income earned so that, they will not be taxed much, meaning to say,
this system encourage fraud on the income statement.
5. Under this system, there is a possibility of false declaration of income
(under and over declare). If under declare of the income, this will
affect the revenue of the government while if there is over declare of
the income, this will burden the tax payers and may affect their daily
activities.
3.This type of taxation does not reward hard work, where looking in
details, it is quite unfair and unjust for the diligent and hardworking
people who try hard to accumulate wealth through his great efforts.
Simply stated that, the person has put so many efforts to earn much
but the money earned will have to be foregone in order to finance
other people and things which not directly will benefit the tax payers.
Therefore, this system is actually demotivate workers from working
harder.
4. This system also leads to several moral hazards where businesses or
individuals who refuse to comply with this tax, will cheat in terms of
income earned so that, they will not be taxed much, meaning to say,
this system encourage fraud on the income statement.
5. Under this system, there is a possibility of false declaration of income
(under and over declare). If under declare of the income, this will
affect the revenue of the government while if there is over declare of
the income, this will burden the tax payers and may affect their daily
activities.
Taxation in Malaysia
Demerits
Demerits
Other issues of taxation in Msia
Income Distribution
Under this issue, there is a demand from the public in which they
claim that the rate of taxes for the rich should be more, i.e. they shall
pay more than the middle and lower income group. This means that,
there should be a new mechanism where there is a unique and
different rate for the rich to be taxes so that the rich will not be richer
while the poor become poorer.
Elastic vs Inelastic products
Several critics stated that, in the case of indirect taxes which imposed
on goods and services, government should look at the elasticity of the
product. In this case, the more elastic products like food and clothing
should not be taxed heavily or this will burdened the lower income
group but for the inelastic product like gold, luxury goods such as
cars and furniture, government can impose heavy tax.
Income Distribution
Under this issue, there is a demand from the public in which they
claim that the rate of taxes for the rich should be more, i.e. they shall
pay more than the middle and lower income group. This means that,
there should be a new mechanism where there is a unique and
different rate for the rich to be taxes so that the rich will not be richer
while the poor become poorer.
Elastic vs Inelastic products
Several critics stated that, in the case of indirect taxes which imposed
on goods and services, government should look at the elasticity of the
product. In this case, the more elastic products like food and clothing
should not be taxed heavily or this will burdened the lower income
group but for the inelastic product like gold, luxury goods such as
cars and furniture, government can impose heavy tax.
Other issues of taxation in Msia
Where to impose more tax?
Another issue is that, in terms of types of tax, which tax
should be imposed more whether the sales tax, property
tax, income tax or others. And yet it is to important to
determine that, if it involving the lower income group, it
is better that the rate is to be reduced or to be avoided at
all.
Efficiency
Here, government should have a proper plan of activities
based on tax income alone or should not waste the tax
money and whenever possible try to avoid extravagance
expenditures which can burden the public and yet
efficiency in administration can save money and tax
payers are not over-burdened.
Where to impose more tax?
Another issue is that, in terms of types of tax, which tax
should be imposed more whether the sales tax, property
tax, income tax or others. And yet it is to important to
determine that, if it involving the lower income group, it
is better that the rate is to be reduced or to be avoided at
all.
Efficiency
Here, government should have a proper plan of activities
based on tax income alone or should not waste the tax
money and whenever possible try to avoid extravagance
expenditures which can burden the public and yet
efficiency in administration can save money and tax
payers are not over-burdened.
Other issues of taxation in Msia
Tax rate
The government should not increase it every year or it
will lose confidence of the public and this will increase
number of non compliance. Therefore it is better to look
for other source of income to finance several
expenditures.
Trends of cost / price of goods
There is a high demand for the government to
periodically review the taxation system to match with
the indexation of price, where the rate of taxation must
take into consideration the cost of living and the rise in
price of goods every year.
Tax rate
The government should not increase it every year or it
will lose confidence of the public and this will increase
number of non compliance. Therefore it is better to look
for other source of income to finance several
expenditures.
Trends of cost / price of goods
There is a high demand for the government to
periodically review the taxation system to match with
the indexation of price, where the rate of taxation must
take into consideration the cost of living and the rise in
price of goods every year.
Other issues of taxation in Msia
What about the implications of income tax reductions,
rebates and exemptions on the governments fiscal policy to
redistribute income within the society?
Positive
1. Improve the economic (purchasing power) of low income group
2. Encourage spending for the higher income group pump in money to
domestic market
3. Lower the income tax burden encourage savings and hardworking for
the tax payers
4. Rakyat will have more confidence towards the government
Negative
1. Reduce the government revenue and the supply of government
services to the public decreasing public spending
2. Less public goods and more private goods
3. Possibility of slow down in physical development and domestic
economic growth
4. Can create inflation too much money chasing for too few goods
What about the implications of income tax reductions,
rebates and exemptions on the governments fiscal policy to
redistribute income within the society?
Positive
1. Improve the economic (purchasing power) of low income group
2. Encourage spending for the higher income group pump in money to
domestic market
3. Lower the income tax burden encourage savings and hardworking for
the tax payers
4. Rakyat will have more confidence towards the government
Negative
1. Reduce the government revenue and the supply of government
services to the public decreasing public spending
2. Less public goods and more private goods
3. Possibility of slow down in physical development and domestic
economic growth
4. Can create inflation too much money chasing for too few goods
Other issues of taxation in Msia
Impact of an increase in indirect tax on market prices
1.Price elasticities of the taxable good the price of certain products will be
fluctuated and there is intensity that the price will keep increasing
2. Change the supply and demand of the taxable good when the p increase
the d will drop
3. Increase the price of other non-taxable good the economics rule: it can
affect the other substitute or complement products
4. Excess burden of tax on social welfare citizens suffer from indirect taxes
which reduce their spending capacity and quality
5. Change the consumer preference on the selection of goods consumer will
shift to other products which have stability in price / lower price
Impact of an increase in indirect tax on market prices
1.Price elasticities of the taxable good the price of certain products will be
fluctuated and there is intensity that the price will keep increasing
2. Change the supply and demand of the taxable good when the p increase
the d will drop
3. Increase the price of other non-taxable good the economics rule: it can
affect the other substitute or complement products
4. Excess burden of tax on social welfare citizens suffer from indirect taxes
which reduce their spending capacity and quality
5. Change the consumer preference on the selection of goods consumer will
shift to other products which have stability in price / lower price
Taxation of Corporate Income
What should be taxed under this type of tax?
Corporation = a business that is legally established under
Malaysia Companies Act 1957 that grant it an identity
separate from that of its owners.
It is Direct Tax contributing major revenues to
government.
The Structure of corporate tax
- Progressive-rate tax
- Flat-rate tax
- Corporate tax based on yearly net income
What should be taxed under this type of tax?
Corporation = a business that is legally established under
Malaysia Companies Act 1957 that grant it an identity
separate from that of its owners.
It is Direct Tax contributing major revenues to
government.
The Structure of corporate tax
- Progressive-rate tax
- Flat-rate tax
- Corporate tax based on yearly net income
Taxation of Corporate Income
What should be taxed under this type of tax?
Corporation = a business that is legally established under
Malaysia Companies Act 1957 that grant it an identity
separate from that of its owners.
The Structure of corporate tax
- Progressive-rate tax
- Flat-rate tax
- Corporate tax based on yearly net income
The Impact of corporate income tax
- Reduce the corporate profit margin
-Reduce capital investment
- Effects on employee benefits
What should be taxed under this type of tax?
Corporation = a business that is legally established under
Malaysia Companies Act 1957 that grant it an identity
separate from that of its owners.
The Structure of corporate tax
- Progressive-rate tax
- Flat-rate tax
- Corporate tax based on yearly net income
The Impact of corporate income tax
- Reduce the corporate profit margin
-Reduce capital investment
- Effects on employee benefits
Alternative to Taxation
The Impact of Corporate Income Tax
Short-Run
- Reduce the net return to investment in businesses unless
corporations capable of making adjustments to shift the
tax in some ways.
- Reduce corporate profit margin
- Reduce capital investment
Long-Run
- Effects on employee benefits cost cutting policy
- Impact on output less effective (in terms of
specifications) and output production fall
- Impact on prices price will shoot up
- Impact on wages/pay less competitive
The Impact of Corporate Income Tax
Short-Run
- Reduce the net return to investment in businesses unless
corporations capable of making adjustments to shift the
tax in some ways.
- Reduce corporate profit margin
- Reduce capital investment
Long-Run
- Effects on employee benefits cost cutting policy
- Impact on output less effective (in terms of
specifications) and output production fall
- Impact on prices price will shoot up
- Impact on wages/pay less competitive
Alternative to Taxation
1.Debt Finance - the use of borrowed funds to finance govt. expenditures
2.Inflation as a means of finance government-induced inflation is a
sustained annual increase in prices caused by expansion of the money
supply to pay for government-supplied goods and services.
3.Donations -voluntary contributions to governments from individuals or
organizations
-these occasionally are used to finance particular programs
4.User charges -prices determined through political rather than market
Interaction
-it can finance government-supplied goods and services only when it is
possible to exclude individuals from enjoying their benefits unless they
pay a fee
5.Pricing the output of government enterprises -subsidized price of
public goods will be lessen
-cut services of public facility that priced at zero
1.Debt Finance - the use of borrowed funds to finance govt. expenditures
2.Inflation as a means of finance government-induced inflation is a
sustained annual increase in prices caused by expansion of the money
supply to pay for government-supplied goods and services.
3.Donations -voluntary contributions to governments from individuals or
organizations
-these occasionally are used to finance particular programs
4.User charges -prices determined through political rather than market
Interaction
-it can finance government-supplied goods and services only when it is
possible to exclude individuals from enjoying their benefits unless they
pay a fee
5.Pricing the output of government enterprises -subsidized price of
public goods will be lessen
-cut services of public facility that priced at zero
Thank You.
Thank You.