The taxpayer-shareholder fallacy and private finance initiatives


Vries, P. de (2007) The taxpayer-shareholder fallacy and private finance initiatives. Journal of public budgeting, accounting & financial management, 19 (3). pp. 273-289. ISSN 1096-3367

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Abstract:There is a growing support for the view that the private sector is
at least as efficient as the public sector in managing investment risks of
large projects. Governments forget that it is the taxpayer who bears all the
risks in a public finance scenario of investments. So, it seems unfounded
that governments should neglect the cost of investment risk in obtaining
finance as the taxpayer might be seen as a shareholder in (public)
investments, which by definition are risky. It is this taxpayer-is-shareholder
perspective that will be criticized in this paper. This taxpayer approach
neglects the variety of funding and financing positions that might be taken
by the various actors in investment projects. The paper concludes that some
prudence is recommended in supporting private finance initiatives.
Item Type:Article
Copyright:PrAcademics Press
Faculty of Behavioural, Management and Social sciences (BMS)
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