Government Revenue And Expenditure Flashcards
Government Revenue
Government Revenue refers to all money received by the government e.g taxation.
Government Expenditure
Government Expenditure refers to all money spent by the government e.g spending on the health service.
Capital or current
Government Revenue and Expenditure can be Current or Capital.
Current Revenue
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
Capital Revenue:
Capital Revenue: is money received on an irregular once off basis.
Example: an EU Grant
Income Tax:
tax paid on wages and salaries
Universal Social Charge (USC):
a tax paid on wages and salaries
Pay Related Social Insurance (PRSI)
insurance paid by employers and employees which is used to fund social welfare payments e.g jobseekers benefit
Value Added Tax (VAT):
tax on the value added to goods at each stage of their production.
Sources of government current revenue
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
Corporation Tax
tax paid on a company’s profits
Excise Duty
a tax charged on certain goods to try and
reduce consumption of them e.g alcohol
Customs Duties
tax charged on goods coming into Ireland from outside the EU
Local Property Tax:
a tax on residential properties
Capital Gains Tax (CGT):
tax on profits earned from investments
Capital Acquisitions Tax (CAT):
a tax on gifts and inheritances
Dividends from State Companies
the government receive a percentage of any profit earned by companies that they have a share in e.g An Post
Stamp Duty:
a tax for registering legal documents e.g the deeds of a house
Sources of Government Capital Revenue
Sale of State-Owned Companies
Borrowings
EU Grants
Sale of State-Owned Companies:
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
Borrowings
a loan from other governments or financial institutions
EU Grants
money from the EU that is used to support important economic and social projects
Current Expenditure
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
Capital Expenditure:
is spending on ‘once-off’ projects or infrastructure (basic facilities, structures and services needed for a country to function).
Example: building a school
Examples of Government Current Expenditure
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
Examples of Government Capital expenditure
Public Transport: e.g buying new trains
Health: e.g building a new hospital Education
Education: e.g building a new school
The national budget
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.
A Balanced Budget
This is when planned revenue = planned expenditure
A budget Surplus
This is when planned revenue is more than planned expenditure.
The government will have money left over at the end of the year.
A budget Deficit
This is when planned revenue is less than planned expenditure.
This means the government will owe money at the end of the year.
Solutions to a Budget Deficit
Increase planned revenue e.g increase taxation
Reduce planned expenditure e.g reduce public services
Borrow money e.g from the European Central Bank
