1) For governments to provide public goods for instance, defense, street lighting, railways and roads makes it necessary to have public finance;
2) Public finance makes it possible to deal will spillovers as well as externalities such as pollution among others;
3) Income distribution through collection tax revenues from the wealth people or firms in the society to provide basic services for the poor;
4) Provision of social security. That is providing financial or social support for the less fortunate people in the society;
5) Employment creation as well as dealing with fluctuations in the economy ;
Read More: We are at budget approval stage
Classical economists such as John Mill were against the idea of having government interfere with the running of the economy. They always preferred to let the “invisible hand” to be left alone to bring the economy to equilibrium.
John Keynes on the other hand was a leading advocate for government expenditure as part of spurring the economy.
