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Chp 37 Gov Revenue and Expenditure
Term | Definition |
---|---|
National Budget | This is a plan of government future income and expenditure for the country over a period of time, usually one year. It shows where the money will come from, and where it will be spent. |
Current Budget | This outlines the expenditure needed to run the country on a day-to-day basis and where income to finance this will come from. |
Capital Budget | This outlines the expenditure on capital projects (long-term projects) and where the income to finance these projects will come from. |
Capital Expenditure | Money spent on long-term, once-off projects, e.g.infrastructure like building a new hospital, a new school, a new motorway etc. |
Capital Income | This is income received on a once-off basis and is used for capital expenditure, e.g. Borrowing, Sale of a state company, EU grant. |
Current Expenditure | This is expenditure on the day-to-day running of the country. |
Examples of Current Expenditure | (i) Wages/salaries of public sector - Teachers, Gardai, Nurses. (ii) Social Welfare benefits – job seekers benefit, child benefit (iii) Running costs of Government departments–e.g. hospitals,(iv) Debt Servicing – paying interest on the National Debt. |
Current Income | This in income received by the government on a regular basis and it is used to cover current expenditure. Examples: |
Examples of Current Income | 1. Profits from State firms. 2. National Lottery receipts. 3. Tax - Income tax, VAT, Corporation tax, Excise duties, USC, Local Property Tax, Capital Gains Tax, Capital Acquisitions Tax. |
What can a government do with a Budget Surplus | (i) Reduce taxation (ii) Pay off some of the national debt (iii) Invest in Capital expenditure to build new schools and hospitals etc. (iv) Increase current spending to improve services, e.g. health and education. |
What can a government do to eliminate a Budget Deficit. | (i) Increase taxation (ii) Reduce current expenditure by cutting back on public services, (Cutbacks). (iii) Borrow the amount of the shortfall. |
National Debt | Total amount of money borrowed by government over the years. Interest must be paid on this. |
Debt Servicing | Interest payments on the national debt paid by the government to its lenders. |
Public Utilities | These are essential services needed for the efficient running of the country, e.g. roads, airports, electricity, sewerage, postal service, schools etc. |
Local Authorities | These are local government that provide services to the local area, e.g. water supply, refuse collection, playgrounds, leisure amenities, parking. |
Privatisation | This is when the government decides to sell a semi-state company, e.g. Eircom, Aer Lingus. |
Current Budget Surplus | Surplus Current Budget This occurs when the planned current income is greater that the planned current expenditure for the year. |
Current Budget Deficit | This occurs when the planned current expenditure is greater that the planned current income for the year. |
Who prepare the National Budget | The Dept of Finance and the Dept of Public Expenditure and Reform. |
Balanced Budget/Neutral Budget | When the Gov expects planned income to be the same as planned expenditure. |
Budget Surplus | When Gov revenue is expected to be greater than planned expenditure. Gov takes more money out of economy (taxation) than it puts in (spending). Its a Contractionary Budget as economy gets smaller. |
Budget Deficit | When Gov planned revenue is less than planned expenditure. Gov is living beyond its means. Gov is injecting more money into the economy (spending) than it is taking out (taxation). An Expansionary Budget. |