Beware of Little Expenses! A Small Leak Will Sink A Great Ship:
Beware of little Expenses because it is a term for matters regarding the management, creation and study of money and investments. It specifically deals with how the capital is generated and how they SPEND or INVEST the money. Finance is then often split into the following major categories of corporate finance, personal finance and public finance.
Corporate finance is the division that deals with how corporations deal with funding sources, capital structuring and investment decisions. Corporate finance is often associated with a corporation’s financings, investment and capital budgeting decisions. Moreover, it manages short term financial decision that affects operations. In addition to capital investments, corporate finance deals with sourcing capital. It also includes whether shareholders should receive dividends or not.
Personal finance belongs to an individual. It comprises a person’s income, his spending or investments. Additionally, investments are the best source of finance because it gives a good return as Benjamin Franklin once said,
“An investment in knowledge pays the best interest”
Public finance belongs to the sovereign state. The purview of public finance is considered to be threefold, consisting of governmental effects on:
- The efficient allocation of available resources
- The distribution of income among citizens, and
- The stability of the economy
Now, the question arises how governments create finance for the country’s economy? What are the tools and measures for doing it?
To keep it simple government invests in infrastructure development or transport facilities for the public welfare and sometimes for research spending. Government expenditures are financed through government revenues, government borrowing and money creation. The direct payment is collected from taxes.
Taxes are of two types: direct tax (mainly income tax) and indirect tax (mostly general sales tax). According to Trading Economics Global Models and Analyst Expectation, the personal income tax rate is expected to reach 35% by the end of 2020. Moreover, Pakistan tax revenue was reported at 29.091 US Dollar billion in June 2020. Hence, total income tax return filers in Pakistan are less than 2 million, but FBR data shows that more than 50 million pay taxes, including withholding taxes.
It belies the claim that Pakistanis do not pay taxes. The recent report shows that 9352 taxpayers have shown agricultural income, and 6668 people have not paid provincial agrarian tax. It means only one-fourth of the taxpayers pay the taxes. That is the reason the country’s growth hinges. Likewise, the GDP growth rate from January-march was -0.38%. The negative figure shows that the growth rate has declined, which results in the contraction of business sales or earnings, reducing wage growth and a decrease in real income. Economists view negative growth as a harbinger of a recession or depression.
Benjamin Franklin once said,
”Beware of little expenses, a small leak will sink a great ship”
In short, Beware of Little Expenses! A Small Leak Will Sink A Great Ship. Those little expenses are our import, and they are not minor but massive, which has made our country debted. We should do something to better our country’s growth, or else it would be sunk.
Written by, Musfira Mehmood
Edited and Managed by, Javeria Qadeer