Government Revenue And Expenditure

Question 1

Government Revenue

Answer 1

Government Revenue refers to all money received by the government e.g taxation.

Question 2

Government Expenditure

Answer 2

Government Expenditure refers to all money spent by the government e.g spending on the health service.

Question 3

Capital or current

Answer 3

Government Revenue and Expenditure can be Current or Capital.

Question 4

Current Revenue

Answer 4

Current Revenue: is money received by the government on a regular or day-to-day basis. The majority of this income comes from taxation.

Example: Income Tax, Value Added Tax

Question 5

Capital Revenue:

Answer 5

Capital Revenue: is money received on an irregular once off basis.
Example: an EU Grant

Question 6

Income Tax:

Answer 6

tax paid on wages and salaries

Question 7

Universal Social Charge (USC):

Answer 7

a tax paid on wages and salaries

Question 8

Pay Related Social Insurance (PRSI)

Answer 8

insurance paid by employers and employees which is used to fund social welfare payments e.g jobseekers benefit

Question 9

Value Added Tax (VAT):

Answer 9

tax on the value added to goods at each stage of their production.

Question 10

Sources of government current revenue

Answer 10

Income Tax
Universal Social Charge (USC)
Pay Related Social Insurance (PRSI)
Value Added Tax (VAT)
Corporation Tax 
Excise Duty
Customs Duties
Local Property Tax
Capital Gains Tax (CGT)
Capital Acquisitions Tax (CAT)
Dividends from State Companies

Question 11

Corporation Tax

Answer 11

tax paid on a company’s profits

Question 12

Excise Duty

Answer 12

a tax charged on certain goods to try and

reduce consumption of them e.g alcohol

Question 13

Customs Duties

Answer 13

tax charged on goods coming into Ireland from outside the EU

Question 14

Local Property Tax:

Answer 14

a tax on residential properties

Question 15

Capital Gains Tax (CGT):

Answer 15

tax on profits earned from investments

Question 16

Capital Acquisitions Tax (CAT):

Answer 16

a tax on gifts and inheritances

Question 17

Dividends from State Companies

Answer 17

the government receive a percentage of any profit earned by companies that they have a share in e.g An Post

Question 18

Stamp Duty:

Answer 18

a tax for registering legal documents e.g the deeds of a house

Question 19

Sources of Government Capital Revenue

Answer 19

Sale of State-Owned Companies
Borrowings
EU Grants

Question 20

Sale of State-Owned Companies:

Answer 20

the government can sell their share in a company that they own e.g in 2015 the government sold its 25% stake in Aer Lingus to IAG for €335 million

Question 21

Borrowings

Answer 21

a loan from other governments or financial institutions

Question 22

EU Grants

Answer 22

money from the EU that is used to support important economic and social projects

Question 23

Current Expenditure

Answer 23

is money paid out by the government on a regular or ongoing basis. The majority of this spending is on providing essential public services.

Example: Teacher Wages

Question 24

Capital Expenditure:

Answer 24

is spending on ‘once-off’ projects or infrastructure (basic facilities, structures and services needed for a country to function).

Example: building a school

Question 25

Examples of Government Current Expenditure

Answer 25

Social Protection e.g child benefit, jobseeker’s benefit

Healthcare e.g Doctor’s wages, buying medicines

Education e.g Teacher’s wages, light & heat

Justice e.g Garda wages, operating costs of prisons

Agriculture e.g income support for farmers

Defence e.g soldier’s wages

Question 26

Examples of Government Capital expenditure

Answer 26

Public Transport: e.g buying new trains

Health: e.g building a new hospital Education

Education: e.g building a new school

Question 27

The national budget

Answer 27

A national budget is the government’s financial plan for the year ahead.

It is prepared by the Department of Finance and the Department of Public Expenditure and Reform.

Question 28

A Balanced Budget

Answer 28

This is when planned revenue = planned expenditure

Question 29

A budget Surplus

Answer 29

This is when planned revenue is more than planned expenditure.

The government will have money left over at the end of the year.

Question 30

A budget Deficit

Answer 30

This is when planned revenue is less than planned expenditure.

This means the government will owe money at the end of the year.

Question 31

Solutions to a Budget Deficit

Answer 31

Increase planned revenue e.g increase taxation

Reduce planned expenditure e.g reduce public services

Borrow money e.g from the European Central Bank