Government Revenue and Expenditure Flashcards
What is Government Revenue?
Refers to all money received from the government.
What is Government Expenditure?
Refers to all money spent by the government.
What is Current Revenue? Give an example.
Money received by the government on a regular or day-to-day basis. The majority of this comes from taxation. E.g. Income Tax
What is Capital Revenue? Give an example.
Money received by the government on an irregular once-off basis. E.g. An EU grant
What is income tax?
Tax paid on salaries and wages
What is USC?
Universal Social Charge a temporary tax paid on wages and salaries to help Ireland during the financial crisis.
What is PRSI?
Pay Related Social Insurance is paid by employers and employees to fund the social welfare payments of jobseekers benefit.
What is VAT?
Value Added Tax is a tax added on to the value of goods at each stage of production.
What is Corporation Tax?
Is a tax paid on a companies profits.
What is Excise Duties? Give Examples.
A tax charged on certain goods to try and reduce their use. E.g. Tax on alchohol to reduce the amount of alchohol people consume.
What are custom duties?
Tax charged on goods coming in to Ireland from outside the EU.
What is LPT?
Local Property Tax-a tax on residential properties
What is CGT?
Capital Gains Tax-A tax on profits earned from investments.
What is CAT?
Capital Aquisitions Tax-A tax on gifts and inheritance.
What are state companies and how do they provide current revenue? Give an example.
State companies are set up an run by the government to provide essential services. Some are commercial and others are non-commercial. The commercial companies bring current revenue to the government in the form of monthly dividends of profit. e.g. An Post
What is Stamp Duty?
A tax for registering legal documents. E.g. the deeds of a house.
How does privatisation provide Capital Revenue?
The governemnt sell their share in a company they own in order to increase revenue. E.g. In 2015 the government sold its 25% stake in Aer Lingus to IAG for €335 million.
Explain two sources of capital revenue for the government except privatisation.
Borrowing-A loan from other governments or financial institutions.
EU Grants-Money from the EU that is used to fund important economic or social projects.
What is Current Expenditure? Give an example.
Money paid out by the government on a regular or ongoing basis. The majority of this is spent on providing essential services. E.g. Teacher’s wages.
What is Capital Expenditure? Give an example.
Is spending on ‘once-off’ projects or infastructure (basic facilities, structure and services needed to run a country.) E.g. Building a school.
List and give examples of six items of current government 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 and heat
Justice-e.g. Garda wages, operating costs of prisons
Agriculture-e.g. income support for farmers
Defence-e.g soldiers wage
List and give examples of three items of government capital expenditure.
Public Transport-e.g. Buying new trains
Health-e.g. Building a new hospital
Education-e.g. Building a new school
What is the national budget?
The 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.
What makes a balanced budget?
When Planned Revenvue=Planned Expenditure.
What is a budget surplus?
When Planned Revenue is more than Planned Expenditure. The money will have money left over at the end of the year.
What is a budget deficit?
When Planned Revenue is less than Planned Expenditure. This means the government will owe money at the end of the year.
Explain three solutions to a budget deficit.
- Increase planned revenue e.g. increase tax
- Reduce planned expenditure e.g. reduce public service
- Borrow money e.g. from the European Central Bank.
