Shifting Economies in the Public Sector

 Shifting Economies in the Public Sector

As we discussed in the last essay, the Western ways of dealing with the ever-growing government were diverse.
But economies throughout the world that are still adjusting have discovered the hard way that not everything that is Western-fits. In Macedonia, for example, many Western practices, procedures, systems, and ways of thinking just do not work.

Government spending is a major drag on global economies.
Taxes paid by individuals and companies provide the bulk of its funding.
Taxes are a way to redistribute wealth in the economy. Simply said, taxes are a means by which the government distributes funds from its taxpaying people to other groups, including those who are unable or unable to pay the taxes, such as the young and the old. The more upright and industrious members of society are the ones who suffer the most as a result of taxation. It is hardly surprising that taxes are seen negatively in Western countries. People think they're inefficient and unfair.
However, taxes are not only required but also unavoidable. Financing governmental and public sector operations cannot be improved upon.
The level of state intervention in the economy is directly proportional to the amount of taxes collected. The Gross Domestic Product (GDP) is the unit of measurement for this level of involvement. Governments consume anything from 19% (Singapore, Hong Kong) to 59% (France) of the goods and services created in the economy! The numbers are scary, as we said in our previous piece.
Public spending of tax dollars is six times less efficient than private sector investment of the same amount, according to research. Both the public and private sectors compete for a finite pool of resources. There will be less capital available for private consumption and entrepreneurship for every denar that goes to the tax collector.
It is acceptable to say that taxes slow down the economy and make people less employable.
The Western world is currently in a tax-averse and anti-big-government attitude.
Tax avoidance occurs. "Black" capital, which does not have any associated taxes, accounts for around 13–25% of the world's total capital. Despite an official estimate of 200 million USD in circulation across the Macedonian economy, it is believed that enterprises and individuals in the country keep over 1 billion USD in undeclared cash.
On these matters, people openly defy taxation and even sue their governments.
Governments are making efforts to streamline processes and streamline tax returns.
There are two types of tax systems: progressive and regressive.
Larger amounts are due as one's income rises; this type of tax is known as a progressive tax. Under a progressive tax system, a millionaire's tax bill will be substantially higher than his driver's.
A regressive tax does not vary in relation to the taxpayer's income. In the case of a car purchase, for example, the millionaire and his driver will each be subject to the same percentage of tax.
Governments are at their wit's end. They institute systems of a single income tax, which means that no matter how much money someone makes, it will be taxed at the same rate. They are moving away from income taxes, which tend to be progressive, and toward consumption taxes, like VAT (Value Added Taxes), which levies a regressive impact on society.
The overarching objective is praiseworthy: to reduce taxes to below 20% of GDP.
To achieve this objective, however, governments will need to scale back their spending on public services and economic interference.
For developing nations, this is not a brilliant plan.
There are three prerequisites that must be satisfied before the public sector in countries undergoing transition may and should be privatized:
To begin, we must build a robust private sector. The people and businesses that use utilities like power, water, and phone are known as private sector consumers. It would be extremely challenging to sell the PTT, the electricity business, or the water firms to any private investor at acceptable pricing without a solid customer base. In order to privatize, the public sector must first turn a profit. An investor will not put money into a losing business unless he has faith in his ability to earn a profit. The most effective strategy for achieving this goal is to enhance sales to an existing, substantial customer base.
The second stipulation is the elimination of subsidies and price regulation.
Government spending must end at all levels of government interference. Neither subsidizing nor fixing the prices of its goods and services are acceptable. Tax breaks and other forms of government assistance obscure and undermine the real financial and economic situation. They make it harder for potential investors to provide the public sector company a fair price.
Any investor looking to purchase a public sector corporation needs to be sure he may set his own pricing for the company's goods and services. This is the path to success and prosperity for your finances. No worries for the government here:
Investors risk losing customers to rivals that offer lower prices.
But suppose there isn't any rivalry at all. Imagine there is a monopoly in the electrical industry and only one company can provide power. Who will the customer turn to in the event that the prices are excessively high?
The third requirement is this exact thing:
The introduction of local and international competitors into the market.
To repeal any and all anti-competition statutes, ordinances, rules, or precedents. To do away with regulations such as tariffs, quotas, licenses, and controls (with the exception of those pertaining to environmental and public health protections).
I don't see why Macedonia needs more than one PTT. Why don't we have six alternative service providers?
Then why not let anyone build power plants and sell their output to the utility? There ought to be more than one power provider.
Everyone ought to be able to accomplish whatever, given that the proper safety and financial rules are in place. Competitive markets historically have resulted in superior goods and services offered at much reduced prices.
This further demonstrates how the government can be a breeding ground for waste, incompetence, and outright corruption.
In today's economy, "Lean and Mean" is the way to go.
The government is slow and overweight. That thing shouldn't be around for long.
Businesses in the private sector are also "downsizing" (dramatically reducing their workforce).
Nonetheless, the private sector is woefully inadequate to handle some responsibilities. By their very nature, these operations do not aim to generate a profit. Typically, they are carried out by regional, city, and town governments.
In the public sector, there are five revenue streams available to municipal (local) and regional entities: It has the authority to levy taxes on both individuals and businesses, the amount of which is typically correlated with the type of space they occupy, whether it be a residential or commercial building. Fixed fees and tariffs for services including water, sewage, sanitation, commercial sign posting, parking, and toll roads can be collected. It has the power to fine people who break the laws of the city. The parking ticket is the most well-known example of this type of funding. The sale of municipal bonds ("Munis") by local governments to both individual investors and institutional ones, including pension funds, is legal in most countries, including the United States.

The bondholders are paid back by the local authority that issued the bonds using both general revenues from taxes and more targeted revenues from certain projects.
A water treatment facility is being considered by a local body.
Cents one hundred million dollars. In addition to receiving $60,000,000,000 from the government, the Authority also sells bonds to the public via the stock exchanges for $40,000,000.
As soon as construction is complete, water will be supplied to both people and businesses. All the money that comes in from selling water goes to the bondholders, and they have to pay for the water that they use. In addition to the principal and interest that bondholders are required to repay, this income also covers the cost of purchasing the bonds. A new trend in public administration is emerging recently, and it's called devolution.
This refers to either transferring funds from the federal government to the states or municipalities or allowing them to establish and manage their own fiscal (=tax) systems.
Dismantling Big Government is a mega-trend in human society, and devolution is a prime example of it. However, another essay will cover this topic.
Wow, that's funny!

Location:

Share :