Raising Finance in the Public Sector

Franchises: Features

Definition

The public sector comprises organizations run by the government that exist to provide services for the population and communities. These services include healthcare, education, infrastructure development, and more.

Methods of Raising Finance in the Public Sector

Taxation:

Money to fund public sector services is primarily raised through various forms of taxation, including:

• Income Tax: A percentage of individuals' earnings is collected as income tax.
• National Insurance: Contributions are made by individuals to fund social security and healthcare.
• VAT (Value Added Tax): A consumption tax applied to the sale of goods and services.
• Air Passenger Duty: Tax levied on airline passengers departing from the UK.
• Fuel Duty: Tax imposed on the sale of fuel for vehicles.

Government Budget Allocation:

Once tax revenue is collected, it is allocated to various government budgets based on priorities and needs. These budgets fund specific public sector services and projects.

Local Government:

In addition to national governments, local governments also have the authority to raise funds through local taxes, such as property taxes and council tax. These funds are used to provide local services and infrastructure.

Example:

The UK government collects income tax, National Insurance contributions, and VAT from its citizens. These funds are then allocated to various departments and ministries responsible for healthcare, education, transportation, defence, and other public services. Local governments, such as city councils, also raise revenue through local taxation to maintain local infrastructure, schools, and public amenities.

---

Franchises–features

Business Management

In summary, the public sector raises finance primarily through taxation, with funds collected from various sources to provide essential services to the population. These finances are allocated to different government budgets to support specific functions and initiatives.