Explain clearly the nature of a public good with specific reference to provision of education in Kenya today and the role taxes play under such circumstances

A Public good is one used by the public, i.e. some members of society cannot be prevented from its consumption. An example would be provision of Education in Kenya. Generally speaking Education is indivisible, it cannot be priced in the market in order to deprive some members of the society from its use or benefits.

An individual cannot refuse the benefit of education or street lighting. Since the exclusive principle cannot be applied to the indivisible goods or services, this creates a problem of raising the necessary finances. Some individuals may argue that if they didn’t pay for education, the supply of education service would still be there. Voluntary payment would be lower (problem of free riders).

Consequently, provision of such public good/services will be made through compulsory contributions by the members of society for example through taxation. The decisions regarding whether or not education service be provided in Kenya or where or not Kenyans require such good cannot be left to the market forces of demand and supply. Society has to decide the way in which these decisions will be taken and financed and such decisions need not be unanimous.

Government decides whether or not education is necessary and be provided to Kenyan society and how finances have to be raised. Note that education services in Kenya are also provided by the private sector where individuals decide whether or not to pay for such service provided by private institutions.

Government may introduce cost sharing in addition to taxation to ensure that education services are provided to all.

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