D balanced regional development for the economic

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d)Balanced regional development:For the economicdevelopment of a country, balanced regionaldevelopment is very essential. Balanced regionaldevelopment is possible by setting up privateindustries in backward areas instead of in urbanPage | 8 Compiled by: Samson M. (MSc)
areas. To encourage this economic diversion, agovernmentshouldprovidetaxconcession,communication facilities and other infrastructurefacilities. If the private industries fail to divert tobackward regions, they should be taxed heavily. e)Reduce economic inequalities: The major problemof underdeveloped countries is unequal distributionof income and wealth. There is a gap between therich and the poor. Public finance has an importantrole to play in reduction of the gap (income). To bringabout equitable distribution of income and wealth, agovernment should follow the system taxes on thericher section of society, and the amount realizedfrom the rich should then be spent on the poor by theway of providing them social amenities such as freeeducation, medical facilities, public utilities like road,water facility, recreation facilities etc. f)Mobilization of resource:A government canmobilize or raise resources by imposing taxes on thepeople and industries, by encouraging savingthrough various saving schemes. For instance,surplus of public enterprises and borrowings andmaking them available for investment for rapideconomic growth. g)Optima utilization of resources: In developingcountries like Ethiopia, there is an abundantresource that is not utilized or destruction of scarceresources. The solution of this problem lies in theoptimum utilization of the available resources bymeans of adopting planned monetary and publicfinance policies. So, the state should direct the flowof consumption production and distribution in thePage | 9 Compiled by: Samson M. (MSc)
right direction by adopting balanced budgetarypolicy. 2.Social significance: Social justice or equitabledistribution of income and wealth is anotherresponsibility of government in its public financeoperations. The income and wealth gap can reduce byadopting a rational fiscal policy taxation andexpenditure. For example, Luxury items purchasedmainly by the rich should be subject to higher rates oftaxation and necessary item should be exempted fromtaxation. 1.6 Satisfaction of social wants and merit wants Generally, wants arte classified in to three: I.Private want: is wants which are satisfied byindividuals according to their personal incomes.Their degree of satisfaction depends upon theirrespective incomes. Example, wants for house,food, clothes, entertainment or recreations aresatisfied according to individual preferences. II.Social or collective wants: Wants requiredpublic goods which are demanded by allmembers of society equally whether the peoplehave the capacity to pay or not. It require publicgoods to satisfy such as defense, education,public health, food control provisions, weatherforecasting bureau, police protection. Social

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