The role of public finance in the economic development of Newfoundland, 1949-64

Hamdani, Daood Ul Hasan (1966) The role of public finance in the economic development of Newfoundland, 1949-64. Masters thesis, Memorial University of Newfoundland.

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Abstract

The purpose of this study is to analyze the role of public finance in the economic development of Newfoundland since 1949. The thesis starts with a discussion of some of the imminent economic problems of the Province and a description of those features of its economy which have bearing on public revenue and expenditure. A short history of public finance in the Island is sketched from the second half of the 19th century highlighting the financial features which culminated in Confederation in 1949. A survey of public revenue. and public expenditure is presented with a view to show how I conducive the structure of revenue and pattern of expenditure is to the development of Newfoundland The accuracy of revenue is discussed and the elasticity of individual· tax revenues is calculated. Finally capital formation is discussed in relation to fiscal policy and comparison is made between public and private capital formation. Some of the principal findings of this thesis are: 1. Although the revenue from provincial sources has increased rapidly yet the federal aid remains the biggest source of revenue. 2. The common argument that conditional grants distort the provincial priorities does not apply in the case of Newfoundland. 3. Revenue raised from provincial sources suffers from a high degree of rigidity due to earmarking of funds for certain uses and due to low elasticity of tax revenue 4. The revenue estimates suffer from a bias towards under estimation and there is no definite evidence of improvement in them. 5. While public expenditure on material and supplies has been increasing over the years, social welfare has remained the top priority despite the inadequacy of social capital. 6. Public capital formation accounts for a high share of total capital formation and the gross rate of public capital accumulation has been much higher than that of the private.

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