Case Study: Proposal for Revenue

Proposals for Revenue

Case Study

Introduction

Revenue forecasting encompasses the utilization of logical and systematic methods to determine the financial resources that will be needed and that are out there, which are obtainable for purposes in the future. In general, public sector revenues comes on the backs of the public in the form of taxes, fees, license sales or intergovernmental transfers. Attempts to or the ability to determine or identify the connections between the issues that propel funding (tax rates, building permits issued, retail sales) and the ability to accurately project future resources is crucial to evading budgetary failures and avoid collecting extra taxes or fees. For government even a small mistake in predicting or forecasting revenue can be disastrous or could create a serious budget deficit or surplus. Therefore, revenue forecasting is extremely important or key for dependence on property tax to user based revenue fees, forecasting is and will steadily become vital or an important factor to smaller of the government entities (The Web Book, 2013).

Thus, London Congestion Charge project and Charging for Firefighting are two projects initiated for the welfare of the neighborhood. However, there are some differences noted in the idea behind them, as well as, their implementation. For instance, firefighting could reduce the possibility of deaths, both to plants and animals. Where as, the London Congestion project advantages are to mainly reduce traffic congestion in , which may have some externalities positive and negative as a result (less pollution, fewer accidents possibly leading to fewer deaths involving motor vehicles etc.), where people are also included. Another noteworthy difference is in the source of revenue for each. There are several considerations in establishing which should be implemented in a city (Mikesell, 2011).

London Congestion Charge

London Congestion Charge is involved in charging motorists who enter the congestion charging zone, which is defined by an area of 15 square miles in Central London. The charging targets at reducing the number of vehicles getting into the zone. Fundamentally, the city was designed long time ago, and the vehicles at the time were less as compared to the present. As a result, the increase in the number of vehicles has led to drastic traffic jams especially during the weekdays when several people visit the city for jobs. The project wishes to raise the costs incurred by people who drive into the area. The city has then established that since people need to visit the city for different purposes, public transport has been promoted (Mikesell, 2011).

Qualitative Forecasting Method

Relative to the London Congestion Program evidence supports that the Qualitative Forecasting Method was used. The Qualitative Forecasting Method is judgment based or relies on judgments of future revenue to be collected. These techniques are often referred to as judgmental or non-extrapolative method or approaches because of their unpredictable. This method does not heavily rely on statistical data. In addition this approach or method does not depend on difficult requirements of motivating assumptions.

Judgmental Forecasting involves having an individual or small group make judgment or state their opinion on the likelihood of future conditions. Though it can appear rather random, this technique can yield very good results or estimates, especially when experts are involved. The forecaster can use their experience and expertise in combination with other consideration such as historical trends, current economic conditions, and other factors relevant to the revenue source Based upon the yielding results, outcomes and the seemingly, lack of statistical data used, it would appear that the Qualitative Forecasting Method was used in this situation (The Web Book, 2013).

Source of Revenue

The project gets its revenue from the motorists who drive into the area identified as congestion zone. There are different charges on the motorists depending on several factors such as the type of vehicles, the origin of the motorists and the motorists' medical conditions. The revenue gained for the project is targeted towards the public transport. In addition, it is used to improve on the transport infrastructural development in the city. This has reduced the burden on the federal government in maintaining the transport sector. It is noteworthy that the cost is incurred by only the people who drive into the area, and not the entire public.

The amount of revenue can be estimated by calculating the daily number of vehicles entering the zone. This is then multiplied by the amount charged on each in order to get the total amount collected daily. Then, the amount is multiplied by the number of days in a month or year so that the monthly and annual revenue is respectively realized. There has been noted an increasing trend in the revenue with time.

Public Response

The public has had some criticism on the project. To start with, there has been discouragement on people as they find it costly to enter the zone. The decrease in the number of people visiting has been presumed to have reduced the number of business activities. In addition, the project has put a larger burden on the low-income earners as compared to the high-income vehicles owners. The public feel that this is unfair. There is a crisis in the public sector since there has been an extreme increase in the number of people using the public means. The scheme has been criticized due to its implication of charging the public as they use public property.

Alternative implementations could include charging according to the actual model of the vehicles. The current charging system only considers larger categories. However, there could be smaller categories that would enable charges to correspond to the value of the cars. This could have the impact of being fair to all vehicle owners, both low