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The National Budget

The National Budget. For up-to-date-statistics visit Susan Hayes “The Positive Economist”. Overview. Government involvement in the economy National Budget Balanced Budget Budget Surplus Budget Deficit Current Income and Current Expenditure Capital Income and Capital Expenditure

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The National Budget

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  1. The National Budget

  2. For up-to-date-statistics visit Susan Hayes “The Positive Economist”

  3. Overview • Government involvement in the economy • National Budget • Balanced Budget • Budget Surplus • Budget Deficit • Current Income and Current Expenditure • Capital Income and Capital Expenditure • National Debt • Debt Servicing

  4. Why does the government provide services? • Ensure security: eg. Gardai, Army • Essential services/Public Utilities: eg. Education • Too expensive for individuals to set up: eg. ESB • Provide employment: Public & Civil Service

  5. State Owned Business • Is a business which is set up, financed and controlled by the government. • State owned business • State-sponsored body

  6. Semi-state bodies • Energy – An Bord Gais, Bord na Mona • Training/Employment – Fas • Fisheries – An Bord Iascaigh Mhara • Forestry - Coilte • Food – An Bord Bia

  7. …………………….. Tourism –Failte Ireland Business – IDA, Enterprise Ireland Communications – An Post, RTE Transport –IanaroidEireann, Dublin Bus, Luas Marketing – An BordTrachtala

  8. National Government ministers & departments run the country Local County councillors run towns & counties Distinguish Between National & Local Government

  9. Finance Education and Skills Health Jobs, Enterprise and Innovation Financed by tax Government Departments

  10. County Councils Dumps Planning permission Repair roads Libraries Financed by charging for these services. Local Government Services

  11. The National Budget • Is a plan of future government income and expenditure for the country.

  12. Prepared by • The Minister for Finance • In December

  13. Decisions made • How much does the gov need to spend? • How much can be raised by tax? • How much does the gov need to borrow?

  14. Balance Budget • Planned Income = Planned Expenditure

  15. Surplus Budget • Planned Income > Planned Expenditure

  16. What can be done with a surplus budget? • Pay off loans (National Debt) • Reduce tax • Increase spending on health, education

  17. Deficit Budget • Planned Income < Planned Expenditure

  18. How can a deficit be reduced • Increase tax • Reduce spending on health, education etc. • Borrow money – increase the national debt

  19. Irish government must cut spending by 6 billion euro in 2010 budget = approx 4,000 per household Source: Irish Independent 7/11/10

  20. Current Budget Money received and spent on a day-to-day basis. It is used up within one year. Current Income Current Expenditure Capital Budget Money received and spent on a once-off basis. It is used for things that last a long time. Capital Expenditure Capital expenditure National Budget

  21. Current Income • Income Tax • PAYE: Pay As You Earn • PRSI: Pay Related Social Insurance • VAT: Value Added Tax • CGT: Capital Gains Tax (Profit on sale of an asset) • CAT: Capital Aquisitians Tax (Gift or inheritance) • Corporation Tax: Tax on companies profits

  22. .......... • Customs/Import Duty: Tax on imports • Excise Duty: Tax on certain goods such as alcohol, petrol, cigarettes • National Lottery: • Service Charges: Dump, library…. • Profits of Semi-State-Bodies: eg. ESB, BNM

  23. Current Expenditure • Civil & Public Service Salaries: Teachers…… • Social Welfare: Unemployment Benefit…. • Pensions: • Servicing the National Debt: Paying interest on loans

  24. Capital Income • Loans (National Debt):Money borrowed eg. from EU or the World Bank. • Privatisation: Selling off semi-state-bodies eg. Airlingus. • EU Grants: Money given to use by the EU to improve the country.

  25. Michael O’Leary offers to buy government’s share of Aer Lingus

  26. EU Commission did not allow takeover as Ryanair would then be a monopoly

  27. Capital Expenditure • Public Utilities: Building schools, hospitals, roads, libraries…… • Agriculture:Grants to farmers. • Nationalisation: The government may buy a privately owned company in order to save jobs or help the economy. e.g. Anglo Irish Bank

  28. Revenue Buoyancy • Is when the actual taxation revenue collected during the year is greater than that which had been planned for. • This is not the case now however!

  29. National Debt • Is the total amount of money that has been borrowed by the government over the years. • Interest has to be paid and is very high.

  30. Debt servicing • Servicing the national debt means paying interest on the countries loans.

  31. Economising • Means cutting down on spending in order to save money.

  32. Exam Question 2008 Q (b)National Budget

  33. 2007 Q 3 National Budget

  34. 2005 Q 6 (c)National Budget

  35. Exam Question 2001 Q 4 (a)

  36. Recap/Review • Why does the Government get involved in the economy? • What is a Balanced Budget? • How can the Government deal with a Budget Surplus? Budget Deficit? • Budget Deficit • Distinguish between Current Income and Current Expenditure? Examples? • Distinguish between Capital Income and Capital Expenditure? Examples? • What is the National Debt? • What is meant by Debt Servicing?

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