Chapter 12
what is the GOVERNMENT CAPITAL BUDGET
planned expenditure on items not used up during the year,but increase the production capacity of the country e.g a new school
what is the governments BALANCE
the difference between what the government spends and what it takes in
budget surplus
current revenue exceeds current expenditure
budget deficit
current expenditure exceeds current revenue
what is the exchequer balance
total reciepts in the exchequer-the total capital and current expenditure
non voted expenditure
comes directly from the cental fund without being discussed by the minister of finance and departments
General government balance
all general government revenues minus sum of general government expenditures
inflationary budget
revenue expenditure is inreasing or taxation is decreasing
deflationary budget
revenue expenditure is decreasing or taxation is increasing
what is revenue buyoncy
the tax revenue collected for the year is greater than planned
how can government spending affect our daily lives
nutures enterprise
aggregate demand
total demand
industrial disputes and social discord
fights in work and society
wage freeze concequence
people may leave for the private sector BUT a more predictable wage bill
what happens if decrease national debt
lower cost of borrowing,greater capacity to borrow,lower servicing cost
fiscal policy
actions taken by government to manipulate the timing/magnitude/structure. of current revenue and expenditure
what can fiscal policy do
stimulate economic growth,manage inflation,stabilise economic growth
whats neutral fiscal policy
keeps income disrtibution unchanged,even after positive or negative shocks to the economy
expansionary fiscal polisy
decrasing taxes,increasing government expenditure
contractionary fiscal policy
increasing taxes,decreasing government expenditure
what are the limitations of fiscak policy
time barriers,government wasteful spending,influence of world events,
what are the 4 cannons of taxation
EQUITY_ the ability of each person to pay must be considered
ECONOMY_ revenue collected should exceed costs of collection
CERTAINTY_ The amount paid should be certain and clear
CONVIENIENCE_ tax should be levied at a convienient time and in manner
paye conforms (gives in to)to the argue of equity
.
what should taxes be
not a discincentive to work
should redistribute wealth
should aid with economic and social objectives
evasion should not be possible
what is a regressive and a progressive tax
proportionatky less/more in tax as a persons income increases
what is a specific tax
a tax apllied at a fixed rate per physical unit of the goods taxed regardless of its price
what is a stealth tax
is applied so its largely uniticed or not recognised as a tax
how does tax help government achiev econmic goals
decrease consumption
discourage waste
impose fines on anti social behaviour
grant tax breaks to encourage activities.
give financial aid boost to enterprise
what to do in recession
invenst in capital projects
lower tax
make an attractive taxation system fdi)