Government Revenue and Expenditure Overview
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Questions and Answers

What are the two main components of a national budget?

  • Income and Savings
  • Taxes and Spending
  • Revenue and Expenditure (correct)
  • Borrowing and Lending

    • If a government's expenditure exceeds its revenue, it has a budget surplus.

    False (B)

    What is one way a government can increase revenue?

    Increase taxes

    The government might look at selling off ______ bodies to reduce spending.

    <p>semi-state</p> Signup and view all the answers

    Match the following perspectives on taxation with their descriptions:

    <p>Financial = Focusing on the financial impact of taxation Social = Considering taxation's impact on society and well-being of citizens Legal = Recognizing taxation as a legal obligation for those liable</p> Signup and view all the answers

    Which of these is NOT a potential way for a government to respond to a situation where government spending exceeds revenue?

    <p>Increase spending on social welfare (D)</p> Signup and view all the answers

    The purpose of taxation is solely to generate revenue for government services.

    <p>False (B)</p> Signup and view all the answers

    What is one potential drawback of increasing taxes?

    <p>It may discourage economic activity</p> Signup and view all the answers

    Which of the following is NOT a reason why the government must make choices concerning resource allocation?

    <p>Unlimited wants (C)</p> Signup and view all the answers

    A budget surplus occurs when government expenditure exceeds government revenue.

    <p>False (B)</p> Signup and view all the answers

    What are the two main components of a government budget?

    <p>Revenue and expenditure</p> Signup and view all the answers

    The ______ is the government's plan for its expected revenue and expenditure over a fiscal year.

    <p>national budget</p> Signup and view all the answers

    Match the type of government budget with its corresponding description:

    <p>Balanced budget = Government revenue is equal to government expenditure Budget surplus = Government expenditure is greater than government revenue Budget deficit = Government revenue is less than government expenditure</p> Signup and view all the answers

    What is the main responsibility of the Minister for Finance in relation to the national budget?

    <p>Preparing the national budget (A)</p> Signup and view all the answers

    Which of the following is NOT a source of taxation revenue for the Irish government?

    <p>Sales tax (D)</p> Signup and view all the answers

    The more you earn, the less income tax you pay.

    <p>False (B)</p> Signup and view all the answers

    The Irish tax year runs from April 1st to March 31st.

    <p>False (B)</p> Signup and view all the answers

    What is the term used to describe the cost of choosing one option over another, in terms of the benefits forgone?

    <p>Opportunity cost</p> Signup and view all the answers

    What is the name of the Irish Government agency responsible for collecting taxes?

    <p>The Office of the Revenue Commissioners (Revenue)</p> Signup and view all the answers

    Which of the following is NOT a source of government revenue?

    <p>Donations from private citizens (C)</p> Signup and view all the answers

    The ______ is a tax on the profit from a sale of an asset.

    <p>Capital gains tax</p> Signup and view all the answers

    Current income is defined as long-term or once-off income.

    <p>False (B)</p> Signup and view all the answers

    Match the following taxes with their descriptions:

    <p>Income tax (PAYE, PRSI and USC) = Tax on employees' income Value-Added Tax (VAT) = Tax on goods and services Corporation tax = Tax on companies' profits Capital gains tax = Tax on the profit from a sale of an asset</p> Signup and view all the answers

    What is the primary purpose of government expenditure?

    <p>To provide services for the public.</p> Signup and view all the answers

    The sale of state-sponsored bodies is an example of ______.

    <p>Privatisation</p> Signup and view all the answers

    Match the government departments with their corresponding expenditure categories:

    <p>Education and Skills = Schools, universities, teachers' salaries Health = Hospitals, running of hospitals, doctors, nurses' salaries Defence = Army, Air Corps Justice and Equality = Gardaí, courts, prisons Agriculture = Food, forestry and fishing Transport, Tourism and Trade = Transport, sports and tourism Business, Enterprise and Innovation = Businesses, start-ups, trade, investment Employment Affairs and Social Protection = Jobseeker's Benefit, pensions, maternity benefits Housing, Planning and Local Government = Social housing, planning, regulations</p> Signup and view all the answers

    Which of the following is an example of capital expenditure?

    <p>Building a new children's hospital (C)</p> Signup and view all the answers

    Government budgeting is similar to that of individuals and businesses, meaning they need to balance revenue and expenditure.

    <p>True (A)</p> Signup and view all the answers

    What is the name of the document that outlines government spending for a specific financial year?

    <p>Budget</p> Signup and view all the answers

    What is the main purpose of taxation?

    <p>All of the above (D)</p> Signup and view all the answers

    Tax avoidance is illegal.

    <p>False (B)</p> Signup and view all the answers

    What is the difference between tax evasion and tax avoidance?

    <p>Tax evasion is illegal and involves deliberately underpaying taxes. Tax avoidance is legal and involves using loopholes in tax laws to minimize tax liability.</p> Signup and view all the answers

    The ______ is a tax levied on the ownership of residential property.

    <p>Local Property Tax</p> Signup and view all the answers

    Match the following tax types with their corresponding examples:

    <p>Income Tax = Taxes on earnings from salaries, wages, and other sources VAT = Tax collected by retailers on goods and services PRSI = Social insurance contributions paid by employers and employees Corporation Tax = Tax paid by companies on their profits</p> Signup and view all the answers

    Which of the following is NOT a social purpose of taxation?

    <p>Tax on profits to support government spending (B)</p> Signup and view all the answers

    Ethical taxation involves ensuring that all decisions have a moral element.

    <p>True (A)</p> Signup and view all the answers

    Give one example of how taxation encourages economic growth.

    <p>Decreasing VAT or income tax can stimulate consumer spending, leading to increased demand for goods and services, which promotes economic growth.</p> Signup and view all the answers

    Which of the following is NOT a positive impact of taxation?

    <p>Tax evasion, i.e. some people don’t declare all their income (A)</p> Signup and view all the answers

    A budget surplus occurs when planned expenditure exceeds planned revenue.

    <p>False (B)</p> Signup and view all the answers

    What are two examples of government expenditure?

    <p>Examples of government expenditure include nurses' salaries (current expenditure) and new roads (capital expenditure)</p> Signup and view all the answers

    The ______ is the difference between government revenue and government expenditure.

    <p>national budget</p> Signup and view all the answers

    Match the following terms with their definitions:

    <p>Government revenue = The income received by the government from many sources to help run the country and provide services Government expenditure = The government spends their income (revenue) on providing services for the public Budget surplus = When planned revenue is greater than planned expenditure Budget deficit = When planned expenditure is greater than planned revenue Balanced budget = When planned revenue equals planned expenditure</p> Signup and view all the answers

    Which of the following is a potential negative impact of high taxation?

    <p>Higher prices for goods and services (A)</p> Signup and view all the answers

    The USA has a higher tax rate than Canada, leading to more free public services.

    <p>False (B)</p> Signup and view all the answers

    What are two ways a government can generate revenue?

    <p>Governments can generate revenue through taxation and other sources, such as selling assets or borrowing money.</p> Signup and view all the answers

    Study Notes

    Government Revenue and Expenditure

    • Government revenue (income) is collected from various sources, primarily taxation.
    • Revenue is collected by the Office of the Revenue Commissioners (Revenue) in Ireland.
    • Key sources of taxation revenue include Income Tax (PAYE, PRSI, USC), Value Added Tax (VAT), Deposit Interest Retention Tax (DIRT), Corporation Tax, Capital Gains Tax, Capital Acquisition Tax, Customs Duties, Excise Duties, Stamp Duty, Motor Tax, Local Property Tax (LPT), and Vehicle Registration Tax (VRT).
    • Employees pay income tax based on their earnings.
    • Other sources of government revenue include privatization, dividends, and funds from the European Union (EU) or the International Monetary Fund (IMF).
    • Current income is regular, daily income, while capital income is long-term or one-off income.
    • EU grants and borrowing from the European Central Bank (ECB) are additional revenue sources.

    Government Expenditure

    • Government expenditure is the use of income to provide services to the public.
    • Spending is allocated to different government departments via the budget.
    • Expenditures can be categorized into current and capital expenditures.
    • Current expenditure is day-to-day spending, like salaries (e.g., teachers' salaries, social welfare payments).
    • Capital expenditure involves large investments for the long term (e.g., constructing a hospital, buying computers).
    • The government must plan its budget similarly to an individual or business, considering limited resources and prioritizing spending.
    • Financial costs and opportunity costs (the cost of forgoing other alternatives) must be factored into expenditure decisions.

    National Budget

    • A national budget is a plan for government revenue and expenditure for a fiscal year (e.g. the tax year in Ireland runs from 1 January to 31 December).
    • The budget includes expected revenue (money the government expects to collect) and expected expenditure, similar to a household budget.
    • The Minister for Finance and the Minister for Public Expenditure and Reform prepare the national budget.
    • The budget includes a list of all revenue sources and allocates funding to different government departments to support their operations.
    • Budget types include balanced (revenue=expenditure), surplus (revenue>expenditure), and deficit (revenue<expenditure).

    Budget Surplus/Deficit

    • A budget surplus happens when revenue exceeds expenditure, and the government has extra funds.
    • Possible responses to a surplus include paying off national debt, decreasing taxes, and increase spending.
    • A budget deficit occurs when expenditure exceeds revenue, meaning the government's spending is greater than its income.
    • Possible responses to a deficit include borrowing more money (e.g., from the EU), increasing taxes, and decreasing spending.

    Taxation Perspectives

    • Taxation is essential for raising government revenue.
    • Positive impacts include funding public services (e.g., education, healthcare) and promoting economic growth.
    • Negative impacts include potentially disproportionately affecting lower-income earners, causing tax evasion, and adding an extra cost to businesses.
    • Both positive and negative impacts should be carefully considered.

    Calculating the National Budget

    • The national budget involves calculating expected revenue and expenditure for the year.
    • The example given included revenue sources like corporation tax, excise duties, PAYE, USC, and VAT, and expenditure categories like health services, social protection, education, debt servicing, and marine and agriculture.

    Key Terms

    • Government revenue: income to the government
    • Government expenditure: the government's spending
    • National budget: the government's plan for revenue and expenditure
    • Preparing the budget: the process of compiling estimates for the budget
    • Budget surplus: revenue is greater than expenditure
    • Budget deficit: expenditure is greater than revenue
    • Balanced budget: revenue equals expenditure
    • Taxation: the process of collecting revenue from individuals and corporations.

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    Related Documents

    Unit 20 - Government Revenue and Expenditure PDF

    Description

    This quiz explores the various sources of government revenue and expenditure, focusing on taxation and other financial contributions. It highlights key taxes collected in Ireland and the roles of different agencies in revenue collection. Additionally, it looks at how income is allocated and spent by the government.

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