Certified Government Financial Manager (CGFM) 2025 – 400 Free Practice Questions to Pass the Exam

The principle that asserts citizens who benefit from a service should pay for that service is known as the Benefit Principle. This principle is grounded in the idea of fairness and equity, indicating that individuals who derive value from government services should contribute to the funding of those services. In practical terms, it implies that taxes or fees should be levied in proportion to the benefits received by each citizen. For instance, those who use public transportation or public parks would be expected to pay for these services, reflecting their use and the benefits derived.

Interperiod Equity focuses on the fairness of distributing the cost of public services across different periods, ensuring that current and future taxpayers do not unfairly bear the burdens of present costs. Public Good Theory relates more to goods that are non-excludable and non-rivalrous, meaning that they are available for anyone to use without depleting resources. Proportional Taxation refers to a tax system where the tax rate remains the same regardless of income level, not directly addressing the relationship between benefits received and payments made.