John O'Driscoll
Flashcards by John O'Driscoll, updated more than 1 year ago
John O'Driscoll
Created by John O'Driscoll over 5 years ago


Key points around the topic of govt budget and finances

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Question Answer
BUDGET TIP Honohan warned the Minister about the dangers of basing his spending plans for next year on tax revenues which may turn out to be windfall (once-off) gains.
BUDGET TIP 2 BUDGETS always need careful monitoring to ensure that a massive gap between tax and spending doesn’t suddenly open up once again requiring another bout of savage retrenchment (cut-back) measures.
budget tip 3 (see tip 1) The Revenue Commissioners told the Government a surge in corporation tax payments recorded in October’s exchequer returns was the result of strong trading conditions rather than one-off factors. (Irish Times, Nov 15)
monetary policy actions taken by central banks that influence supply of money, interest rates & availability of credit
fiscal policy government actions around their spending (expenditure) and tax policies (revenue)
current spending monies spent on day-to-day items, e.g. public servants/employees' wages; social welfare payments
capital spending monies set aside for infrastructure necessary for a productive economy/social good, such as schools, hospitals, road-building
current budget deficit day-to-day spending is greater than current govt. tax revenue
current budget surplus govt revenue exceeds current spending
balanced current budget day-to-day spending = govt. revenue
inflationary budget govt spending increasing or taxation is decreasing - the govt is putting more money into the economy (Budget 2016)
deflationary budget govt. spending decreasing and/or taxation increasing
neutral budget neither inflationary or deflationary - ie won't be any danger of causing overheating ie too much money racing around economy nor any danger of dampening consumer activity in the economy
revenue buoyancy govt revenue/income/tax returns have proven to be better than what was expected. {this was certainly the case for 2015 across income tax, VAT & corporation tax)
Exchequer borrowing requirement govt borrowing to finance a current (day-to-day) deficit and borrowing for capital (infrastructure)purposes
Public sector borrowing requirement exchequer borrowing + borrowing for semi-states (ESB) and local authorities(Tipp Cty Cncl)
National debt debt built up to date and outstanding debt
debt/gdp debt as a percentage of gdp
National Treasury Management Agency (NTMA) the treasury of the govt and manages assets & liabilities of govt as well as Nat Pension Reserve Fund, NAMA etc sells government bonds(borrows for exchequrer)
debt/GDP ratio calculated by dividing general govt debt by GDP EU sets a 60% limit. Govt have exceeded this greatly over the last while; it is declining presently.
Progressive Tax tax that takes more tax as the person's income increases, e.g. PAYE, capital gains tax
regressive tax a tax that does not take into account people's ability to pay. For example VAT or parking charges are a greater burden to a poorer person than they are to a richer person
Canons of taxation Equity, Economy, Certainty & Convenience
Equity Are taxes fair? Do they fulfil the role of wealth redistribution? {think progressive v regressive}
Economy does the tax collect more than it costs to administer and collect the tax. {NB Irish Water has come in for criticism for failing in this regard - although this is a very politically charged issue) Revenue Commissioners are highly efficient.
Certainty Tax revenue should be predictable thus aiding planning ahead by the govt
convenience Taxes should not prove inconvenient to pay/collect
ad valorem tax more tax is paid as the value of the goods increase eg VAT amount is greater on a computer than it is on a calculator. Stamp duty increases as house prices do
Taxation as a tool of the govt. increase tax to discourage smoking levies on plastic bags to help envir't. tax breaks to encourage investment build infrastructure
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