JC Business - Government revenue + expenditure

Government's Role in the Economy

-To regulate the economy
-To create jobs + collect taxes
-To protect natural resources
-To support enterprise

Regulation

-If the government didn't have rules in place it could lead to corrupt + unfair practices
-The government passes laws to establish order in Irelands economy

Job creation + tax collection

-By creating employment the government is able to collect tax
-The government is the largest employer in the state

Protection of Natural resources

The department of Communications, Energy + Natural Resources is responsible for regulating, protecting + developing Irelands natural resources

Support of enterprise

-The government encourages enterprise
-Enterprise creates jobs which result is more taxes

Agencies the government has in place to support enterprise

-Enterprise Ireland
-Local Enterprise Office
-IDA Ireland

Enterprise Ireland

Government agency responsible for the growth of Irish enterprises in world markets

Local Enterprise Offices

Provides advice, information + support in starting up or growing a business

IDA Ireland

Tasked with attracting foreign direct investment to Ireland (attracts multinational companies)

Minister for finance

-Paschal Donohoe
-Responsible for leading the Department of Finance + for preparing the National budget

Government revenue

Refers to all income received by the government

Current revenue

Money received by the government on a regular or day to day basis
E.g. taxation

What is taxation + who collects it

-Taxation is the government practice of collecting money from the individuals + businesses in a country to pay for public services
-It is collected by the Office of the Revenue Commissioners
-It is the governments main source of revenue

Sources of government current revenue

-Income tax
-VAT
-DIRT
-Corporation tax
-Customs duty
-Excise duty
-Motor tax
-LPT
-Dividends
-USC
-PRSI
-CGT
-CAT
-Stamp duty

Capital revenue

Money received on an irregular or once off basis
E.g. privatisation

Sources of government capital revenue

-Borrowing
-EU funds
-Privitisation

Privatisation

The sale of state owned companies

Government expenditure

Refers to all money spent by the government

Current expenditure

Everyday or regular expenditure

Examples of government current expenditure

-Social protection
-Healthcare
-Education
-Justice
-Agriculture
-Defence
-Transport + tourism

Social protection

Pensions, job seekers benefit

Justice

Legal + judicial system (lawyers + gardai)

Capital expenditure

Refers to one off or long term expenditure

Examples of capital expenditure

-Public transport (new trains)
-Health (new hospitals)
-Education (new schools)

Debt servicing

The amount of money that the government allocates for paying off the national debt

National debt

The total amount of money that a countries government has borrowed

Opportunity cost

The thing you didn't buy

Financial cost

The cost of buying the one you chose

National budget

-Document showing the governments planned income + expenditure for the next year
-Estimates how much each government department will need
-The budget is presented to the Dail in early October

Different departments in the government

-Department of social protection
-Department of Health
-Department of Education + skills
-Department of the environment, community + local government
-Department of communications, energy + natural resources
-Department of arts, heritage + the gaeltacht

Surplus budget (contractionary budget)

Planned total income is greater than planned total expenditure

Deficit budget (expansionary budget)

Planned total expenditure is greater than planned total income

Balanced budget

Planned total income is equal to the planned total expenditure

Government with surplus budget

-Money leftover
-Money available for public expenditure + investment
-Will not have to increase taxes
-Build up rainy day fund

Government with deficit budget

-Doesn't have enough revenue to cover expenditure
-Public expenditure may be cut
-Taxes may be increased
-Government will have to borrow money

Solutions to a budget deficit

-Increase planned revenue
-Reduce planned expenditure
-Borrow money

Government bonds

-Money lent to a government
-The government repays the value of the bond plus interest to the bondholder

Public sector

Part of the economy owned + controlled by the government

Private sector

Businesses not owned + controlled by the government

Who plans the national budget

-Department of finance
-Department of public expenditure + reform