Public finances the UK budget Flashcards
The budget largely looks at…
Income
Fiscal policy is…
Directing the economy via government spending and taxation
The CSR (comprehensive spending review looks more at…
Spending
The. CSR is general guidelines on how they are going to spend their money
Adam S. four criteria’s of taxation:
A good tax should be: Equitable Economical Convenient Certain
An example of a good tax is…
Income tax
A convienient tax would be…
A PAYE (pay as you earn tax)
3 types of tax:
Direct taxes
Indirect taxes
Examples of direct taxes (5)
Income tax National insurance contributions (NICs) Council tax Corporation tax Inheritance tax
Taxes should not create a major incentive for people to their change behaviour.
Fiscal neutrality
When you work you pay these taxes out…
Income tax and NICs (social security tax)
Income tax is % of governments income
25% (1/4)
Examples of indirect taxes (3)
VAT
Excise duties
Custom duties
Progressive taxes hit the…
Rich harder
An example of a progressive tax is…
Income tax
Regressive taxes hit the…
Poor harder
Examples of a regressive tax are…
Poll tax
VAT
Main way to run the economy after WW2
Using fiscal policy (Keynesian policy)
Keynesian demand management was about…
Using the budget to run the economy (could be used to boost AD)
Fiscal stance:
Expansionary
Contractionary
Neutral
An example of an expansionary fiscal stance:
Increase spending
Cutting tax
An example of a contractionary fiscal stance:
Raise tax
Cut spending
Two categories of spending
Current spending
Capital (investment) spending
The budget deficit had two components
Structural deficit
Cyclical deficit
The PSND is…
Total debt
