The Imperfections of Financial Education for an Adequate Comprehension of the National Fiscal Policy

Abstract

Educating on the revenue enhancement system in state-supported finance is likely an essential issue for the country’s development. This content changes public sector and the sustainability of citizens’ lives; therefore, a significant focus on the broad improvement of finance studies is essential. Furthermore, the activity could be organized in connection with the applicable higher education programs. On the other hand, financial management education is treated differently in different countries. It is becoming increasingly important that such a discussion does not directly benefit common development of financial education in recent years. One of the possible ways to deal with personal finances in different economic conditions could be changing students’ attitude to finance knowledge at universities. Young people could be supported by financial education programs that are clearly incorporated into their undergraduate or postgraduate courses. The correct management of these programs helps to improve students and cadets learning experience and the economic wellbeing. Moreover, the learning based on public administration and public finance probably educates patriots of the country and people intolerant to non-transparent activities of public servants. Eventually, the best way to determine the country’s consolidated tax paid by natural and legal persons could be the tax burden rate. Likewise, the financial data supplied to the main European statistics authority by national statistical institutions sometimes can be slightly incorrect. Therefore, even more important issue could be an ordinary citizen living only from the income related to labour relations (or corresponding relations of income) and having an obviously higher tax burden. Another crucial task of the paper is to reveal how taxation, public debt and spending and fiscal policy are perceived by the citizens. In addition, it also tries to respond to questioning about the financial and economic importance on financial education. Furthermore, the theoretical task of the paper is to show the size of the government debt, its service and expenditure in Lithuania and Latvia during the last crisis in 2008. Therefore, it is possible to consider the increase of direct taxes burden by almost twice comparing to the formally announced country’s tax burden. However, additional tax burden includes hidden taxes related to the aggregated spending of an individuals’ income. In an average case, the tax burden for an ordinary employee could come near to two-thirds of the gross yearly income. Then, the overpaid debt services can be very sensitive given to the assumption that an ordinary worker has an approximately adequate level of financial and economic education. The perception of tax burden can encourage each citizen of the country to be responsible for all public servant activities and budget planning processes. Public revenue enhancement is often difficult due to the use of the same concept of taxes as fixed costs for public sector when a person directly receives nothing but additional payments for the majority of public sector services. Therefore, the confusion of terms is fairly constant, which once again shows the need for public finances literacy in all areas of study programs for students or cadets. An authorized Lithuania’s tax burden has comprised less than thirty percent of the country’s nominal gross domestic product in recent years. Nevertheless, political leaders and socalled experts suggest the necessity for increasing Lithuania’s accumulated tax burden. However, there may be a fundamental mistake that social insurance and compulsory health insurance contributions to the funds are not calculated into private individuals and legal entities tax burden. Fortunately, the last year’s budget considered social payments as part of tax revenues. Unfortunately, there are diminutive amount of signs in the continuity of Lithuania’s fiscal policy in the 21st century.