Economics » Public Finance » Government Revenue

Functions of Government Revenue

Government exists in every society to perform a number of functions which are critical to the general well-being of the people. Such functions include:

  1. Provision of legal framework and a social environment conducive for the effective operation of the price system.
  2. Creation and maintenance of social and economic infrastructure e.g. roads, bridges, electricity, pipe-borne water, sanitation, etc. They are called public goods or social overheads.
  3. Redistribution of income e.g. through direct transfer payments or welfare programmes for the vulnerable members of the society.
  4. Re-allocation of resources.
  5. Promotion of macroeconomic objectives.

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