Government Revenue and Expenditure

Question 1

What is Government Revenue?

Answer 1

Refers to all money received from the government.

Question 2

What is Government Expenditure?

Answer 2

Refers to all money spent by the government.

Question 3

What is Current Revenue? Give an example.

Answer 3

Money received by the government on a regular or day-to-day basis. The majority of this comes from taxation. E.g. Income Tax

Question 4

What is Capital Revenue? Give an example.

Answer 4

Money received by the government on an irregular once-off basis. E.g. An EU grant

Question 5

What is income tax?

Answer 5

Tax paid on salaries and wages

Question 6

What is USC?

Answer 6

Universal Social Charge a temporary tax paid on wages and salaries to help Ireland during the financial crisis.

Question 7

What is PRSI?

Answer 7

Pay Related Social Insurance is paid by employers and employees to fund the social welfare payments of jobseekers benefit.

Question 8

What is VAT?

Answer 8

Value Added Tax is a tax added on to the value of goods at each stage of production.

Question 9

What is Corporation Tax?

Answer 9

Is a tax paid on a companies profits.

Question 10

What is Excise Duties? Give Examples.

Answer 10

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.

Question 11

What are custom duties?

Answer 11

Tax charged on goods coming in to Ireland from outside the EU.

Question 12

What is LPT?

Answer 12

Local Property Tax-a tax on residential properties

Question 13

What is CGT?

Answer 13

Capital Gains Tax-A tax on profits earned from investments.

Question 14

What is CAT?

Answer 14

Capital Aquisitions Tax-A tax on gifts and inheritance.

Question 15

What are state companies and how do they provide current revenue? Give an example.

Answer 15

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

Question 16

What is Stamp Duty?

Answer 16

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

Question 17

How does privatisation provide Capital Revenue?

Answer 17

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.

Question 18

Explain two sources of capital revenue for the government except privatisation.

Answer 18

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.

Question 19

What is Current Expenditure? Give an example.

Answer 19

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.

Question 20

What is Capital Expenditure? Give an example.

Answer 20

Is spending on ‘once-off’ projects or infastructure (basic facilities, structure and services needed to run a country.) E.g. Building a school.

Question 21

List and give examples of six items of current government expenditure.

Answer 21

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

Question 22

List and give examples of three items of government capital expenditure.

Answer 22

Public Transport-e.g. Buying new trains
Health-e.g. Building a new hospital
Education-e.g. Building a new school

Question 23

What is the national budget?

Answer 23

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.

Question 24

What makes a balanced budget?

Answer 24

When Planned Revenvue=Planned Expenditure.

Question 25

What is a budget surplus?

Answer 25

When Planned Revenue is more than Planned Expenditure. The money will have money left over at the end of the year.

Question 26

What is a budget deficit?

Answer 26

When Planned Revenue is less than Planned Expenditure. This means the government will owe money at the end of the year.

Question 27

Explain three solutions to a budget deficit.

Answer 27

1. Increase planned revenue e.g. increase tax
2. Reduce planned expenditure e.g. reduce public service
3. Borrow money e.g. from the European Central Bank.