Public finance is a certain relationship of the state with citizens and legal entities in the process of collecting and spending money. These funds are used to provide government functions.
The structure of public finances includes the budgets of entities, municipal (territorial) government bodies, the federal budget, as well as trust funds (states and entities) of extra-budgetary nature. The organization of government funds is inextricably linked with the organization of government regulation and its levels. A federated device is characterized by a three-level system. It contains the federal (central) government, governments at the regional level (republican, provincial, regional, land and others), as well as bodies of the municipal (local, territorial) level. Unitary countries (which are a single entity) are characterized by a two-tier management of public finances. It includes local and central regulation. The scope of powers assigned to each level and the functions performed determine both the size of the income and the procedure in accordance with which the formation and application of these incomes is carried out. According to the constitution of the country, the main issues on profit generation and its spending can be addressed at the central or regional level.
Public finance is the foundation of a country's activities within any economic system. However, under the conditions of the planning and distribution system, the government acts as the owner of most enterprises. This enables the authorities to manage the financial resources of the vast majority of business entities. In a market economy, money is decentralized. A significant proportion of them go beyond the sector of government regulation. Funds from non-governmental sectors belong to the relevant economic entities (public organizations, households, enterprises and others). Thus, the government can regulate the movement of only its own funds. At the same time, the finances of other business sectors can only be affected.
Public finance has a number of functions.
First of all, the funds fulfill the tasks of redistributing national profits between the government and enterprises, the population, the non-productive and production sectors of the economy, as well as between the regions of the country, areas of material production, forms of management and property, and social groups.
Public finance also has a reproductive function. The solution of the corresponding problems is aimed at the reproduction of the productive core power - man. This is manifested in the development and strengthening of areas such as health, education, social security and others. In addition, this function provides for state participation in the development of science, industrial and social infrastructure, stimulating the economy, and providing employment for citizens.
The stimulating tasks come down to increasing the interest of all entities related to education and spending money in more productive and efficient work, accelerating scientific and technological development, and increasing the competitiveness of goods and services in the foreign and domestic market.
The planned function is implemented during the formation and implementation of budgets of all levels and through extrabudgetary funds.
The social function of public finance allows you to solve various social problems.