what is the deiffernce between fisical capacity and fiscal effort?

Question

Question

business accounting

Answer 1

Answer #1

Fiscal capacity,

It refers to the ability of a state to generate or extract revenues inorder to provide goods to public and others services which are necessary for the livelihood.
In economics, fiscal capacity is referred to as the ability of the government to collect taxes, as taxes are the main source of revenue generation for the state,
However it may be noted that taxes are not and also should not be the sole revenue generating option.

Fiscal effort,

Whereas fiscal effort refers to the amount of money that the government actually collects through its activities that is fiscal capacity,
Fiscal effort is often referred to as a percentage of fiscal capacity.

Fiscal capacity is the ability to generate and fiscal effort is the amount that is actually generated.

Answer 2

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