FINANCE - INTRODUCTION
Finance
In
modern context urban local government is also
an economic unit like a firm or household
Needs to be driven by objectives
Rational Behaviour
Economizing
To sum up –
Municipal finance first need to adhere to
core principles of ‘finance’
Secondly it needs to exists for public
interest
Maximisation of aggregate public interest
through maximisation of returns on public
resources is the next frontier
Equitable distribution of returns/wealth is
the final objective of municipal finance
MUNICIPAL FINANCE - PRINCIPLES
The first rule of municipal finance is
wherever possible, charge – recover cost
Property tax constitutes a suitable tax
from which to finance the provision of
pure, local public goods
Services such as water, garbage
collection, public library and public
recreation should be subjected to
pricing.
Failure to use a proper pricing system
suggest that goals other than efficiency
dominate local decision making.
Thank You
PRINCIPLES OF MUNICIPAL FINANCE