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 – Ianaroid Eireann, Dublin Bus, Luas
Marketing – An Bord Trachtala

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

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

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

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

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

28. 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

29. 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!

30. 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.

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

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

33. Exam Question 2008 Q (b) National Budget
Income €m
PAYE
2850
VAT
1930
Corporation Tax
260
Excise Duties
215
5255
Expenditure
Debt Servicing
290
Subtract
Health Services
1960
Social Welfare
1360
Education
1490
Agriculture
285
5385
Deficit
(130)

34. 2007 Q 3 National Budget Current A/C Current Income 2621 - Current Exp
-1910
+711
Capital A/C
add
Capital Income
5961
- Capital Exp
-5812
+149
Surplus
+860

35. 2005 Q 6 (c) National Budget Income €m PAYE 2,550 VAT 1,470
Corporation Tax
260
Customs Duties
235
4,515
Expenditure
Debt Servicing
190
Health Services
1,720
Social Welfare
1,230
Education & Science
1,340
4,480
Surplus 35

36. Exam Question 2001 Q 4 (a)
Income €m

37. 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?