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Economics 2 (reasons for government involvement in the economy (to provide…
Economics 2
reasons for government involvement in the economy
to provide merit goods, goods that society believes should be available to everybody
to provide socially desirable goods, such as public transport
to provide income for people who cannot, involves taxing one set and passing money to another set
to provide services that are too important to be controlled by private sector, Army and Garda are two such examples
to make regulation concerning the running of economy, minimum wage and health and safety regulations
to provide finance for industries when the private sector is unable to do so,
things provided by government are called public utilities or public services, these are part of infrastructure of the country
current and capital budget
governments current budget
government's estimate on current income and current expenditure on coming year
income sources
income tax (PAYE), VAT
Stamp duty = tax on cheques credit and laser cards and on transfer of property
Customs duty - importation from non-EU countries
Excise Duties - specific goods produced in country like petrol, alcohols and tobacco
Dirt - Deposit Interest Retention Tax
Corporation tax - profits made by companies
Capital gains - on profits made from sale of assets
capital acquisition tax - on inheritances
EU receipts
National Lottery
Profit from Central Bank
Charges for services - fees charged by governemtn departments and semi-state bodies
main departments and spending
Health and Children
Hospital / medical services
Social and Family affairs
social welfare benefits
Education and science
teaching / educational services primary to third
Justice, Equality and law reform
Garda and policing / law services
Enterprise, Trade and Employment
Industrial relations / consumer rights
Environment, Heritage and Local Government
develop roads, protect heritage and provide social housing
Defence
army, naval and air corps
Capital budget
income
surplus on current budget
Privatisation
Eu grants
borrowings
Types of current budgets
balance, deficit or surplus
exchequer balance difference between total revenue and expenditure (capital and current)
borrowings added to national debt
national debt is total amount owed by central government at any time
General government debt (GG debt) national debt + local
Debt servicing
payments of interest on national budget
Budget options
if Minister of Finance is faced with deficit on current budget he might increase taxes, decrease expenditure or borrow for deficit
if faced with a surplus the minister might reduce taxes, increase current expenditure, pay on something in capital expenditure or pay off national debt
central and local government
central government is responsible for overall national economic issues and the provision of goods and services
local government is responsible for the provision and maintenance of local roads, water services, waste disposal services
National Budget
government's estimate of its income and expenditure for the upcoming year
organisation of the national budget
each department makes estimations on amount of money they think they're going to make and submit to finance department
minister calculates how much is needed to pay for expenditure
published on the budget and presented to the Dáil on first wednesday of december each year
government makes distinctions between current and capialt expenditure
current expenditure is spending on provision of goods and services that will be totally consumed in that year
social welfare, salaries for employees, payments for the running of schools, interest payments on national debt, day to day running costs of health services, grants to sporting bodies
capital expenditure is spending on assets that will benefit the country for some years into the future
new schools, new roads, new hospitals, computers for schools, grants to CIÉ to purchase new trains, new sporting facilities