Centre for Financial & Management Studies (CeFiMS) - University of London

Public Financial Management: Revenue [PPM202]

Introduction

This course addresses the theory and practice of public finance with special reference to how governments raise revenues. It is concerned with taxation, borrowing and aid. There are economic principles that bear on the issues of financing public expenditure and these are covered in the course. If you have not studied economics before there is an Appendix that covers the relevant microeconomics concepts that underlie taxation theory.

At the same time the course recognises that decisions on taxation, borrowing and aid are not taken solely with reference to economics but also to politics.

Aims & Objectives

By the end of this course, you will be able to:

• apply and assess the main tools of analysis used by mainstream economic theory to construct and design taxation and expenditure policy in a variety of country and policy contexts;

• identify the global trends in tax and other government revenues and the economic and political factors underlying these trends;

• recognise and assess different views on the role of public finance in the process of economic development;

• identify and apply basic concepts and priorities in the management of debts and deficits;

• apply a political economy perspective to the role of aid in the process of economic development;

Resources

Students receive a loose-leaf binder containing eight ‘course units’; these texts are carefully structured to provide the main teaching and are equivalent to traditional course lectures, defining and exploring the main concepts and issues, locating these within current debate and introducing and linking the further assigned readings. Much of the unit text is dedicated to contextualising the readings and providing guidance, commentary, and activities on them, to stimulate and facilitate your study of the issues they pose. Two assignments (to be marked by your CeFiMS tutors), and a specimen examination paper are also included within the student pack, along with the following:

Textbooks:

Joseph E. Stiglitz, Economics of the Public Sector, Third edition, 2000, W.W. Norton, ISBN0393966518 (The course makes intensive use of the textbook in Units 2, 3, 4, 6 and 7).

Readings:

A compilation of further readings: recently published articles or seminal writings which augment and illustrate the main text. These readings are drawn from a wide variety of sources including:

• “classics” in the study of public finance

• operational and policy documents that illustrate how the public finance practitioner uses the tools of public finance in real world policy contexts

• case studies and research papers that examine the impact of various public finance policies and initiatives in a variety of country and policy contexts.

Course Timetable:

This shows the linkage between the various components of the course and indicates the schedule for reading the texts, submitting assignments, etc.

Course Content

• Unit 1 Strategic Financial Issues in Context

  • Introduction

  • Types of Tax

  • Trends in Taxation

  • Tax Reforms and Tax Administration

  • Issues in Taxation Policy

  • Efficiency, Simplicity, Flexibility and Political Responsibility

  • Issues in Taxation Policy

  • Fairness and Equity

  • Conclusion and Summary Quiz

• Unit 2 Issues in Taxation

  • Tax Incidence and Optimal Taxation

  • Introduction

  • Tax Incidence

  • Optimal Taxation

  • Conclusion

• Unit 3 Debts and Deficits

  • Introduction

  • What is Deficit Financing?

  • Does Domestic Debt Matter?

  • Why do Deficits Matter?

  • Fiscal Adjustment and Fiscal Illusions

  • Debt and Deficits

  • Case Study :Nepal

• Unit 4 Local Financing

  • Sources of Revenue at Local Level

  • Alternatives to Taxation

  • Summary and Conclusions

• Unit 5 Tax and Policy Objectives

  • Introduction

  • Environmental Taxes: the ‘Double Dividend’?

  • Tax and Income Distribution

  • Tax and Behaviour: the Example of Tobacco Tax

  • Summary and Conclusions

• Unit 6 Tax Competition

  • Introduction

  • Do Tax Incentives Attract Foreign Direct Investment (FDI)?

  • What are the Options for Tax Incentives?

  • What are the Consequences of Tax Competition?

  • What are the Options for Future Strategies

  • Summary and Conclusions

• Unit 7 Tax Policy Issues in Developing and Post-Communist Economies

  • Optimal Taxation and Tax Reform in Developing Countries

  • Current Issues in Tax Policy and Practice: VAT

  • Current Issues in Tax Policy and Practice: Post-Communist Economies

  • Case Study: China

  • Issues in Land and Agricultural Taxation

  • Summary and Conclusions

• Unit 8 Aid and Debt Relief

  • What is Foreign Aid?

  • Why Aid?

  • Debt relief

  • Aid Strategy

  • Summary

Tuition & Assessment

There are two Assignments for the Course after Units 4 and 8, that is, in weeks 4 and 8 of the study calendar.

To assist with revision and preparation for the final examination, review questions and a specimen examination paper are contained in the course file. The assignments count for 30% of the final mark and the examination 70%. Assignments are submitted and feedback given online. In addition, queries and problems can be answered through the Online Study Centre.