The following data shows the budget of hypothetical country in 2006. Study data and answer
The following data shows the budget of hypothetical country in 2006. Study data and answer the questions that follow:
| Revenue | [$ million] |
| Company tax | 240 |
| Workers' income tax | 160 |
| Excise duties | 80 |
| Taxes on exports | 100 |
| Value added tax | 150 |
| Import duties | 90 |
| Non-tax revenue | 40 |
| Expenditure | [$ million] |
| Construction of roads | 100 |
| Building of schools | 120 |
| Payment of workers' salaries | 150 |
| Government administration | 200 |
| Maintenance of health facilities | 220 |
| Extension of electricity to rural areas | 180 |
| Maintenance of official vechicles | 70 |
(a) How many revenue was realised from:
(i) direct taxes;(3 marks) ,(ii) indirect taxes (3 marks)
(b)Calculate the total:
(i) recurrent expenditure (3 marks) ,(ii) capital expenditure (3 marks)
(c) What pencentage of total revenue was collected as indirect taxe? (3 marks)
(d) State two examples of non-tax revenue (2 marks)
(e) What was the budget surplus or deficit? Explain your answer. (3 marks).
Explanation
| (a) (i) Direct taxes | |
| Company tax | - 240 |
| Worker' income tax | - 160 |
| Total | $400m |
| (ii) Indirect taxes | |
| Excise duties | - 80 |
| Taxes on exports | - 100 |
| Value Added Tax | - 150 |
| Import duties | - 90 |
| Total | $420m |
| (b) (i) Recurrent expenditure | |
| Payment of workers' salaries | - 150 |
| Government administration | - 200 |
| Maintenance of health facilities | - 220 |
| Maintenance of official vehicles | - 70 |
| Total | $640m |
| Capital expenditure | |
| Construction of roads | - 100 |
| Building of schools | - 120 |
| Extension of electricity | - 180 |
| Total | $400m |
(c) Indirect tax as percentage (%) of total revenue.
Indirect tax = $420m
Total Revenue - $860m
Therefore % = \(\frac{420}{860}\) x \(\frac{100}{1}\)
= 48.84%
(d) Non-tax revenue includes court fines, road tolls, grants, sales of government assets, licenses, royalties, aids, interest, dividends, rents and profit.
(e) Total revenue is $860 million.
Total expenditure is $1040 million
$860 - $1040 = - $180m
Since the total expenditure exceeds the total revenue, it is a budget deficit.
| (a) (i) Direct taxes | |
| Company tax | - 240 |
| Worker' income tax | - 160 |
| Total | $400m |
| (ii) Indirect taxes | |
| Excise duties | - 80 |
| Taxes on exports | - 100 |
| Value Added Tax | - 150 |
| Import duties | - 90 |
| Total | $420m |
| (b) (i) Recurrent expenditure | |
| Payment of workers' salaries | - 150 |
| Government administration | - 200 |
| Maintenance of health facilities | - 220 |
| Maintenance of official vehicles | - 70 |
| Total | $640m |
| Capital expenditure | |
| Construction of roads | - 100 |
| Building of schools | - 120 |
| Extension of electricity | - 180 |
| Total | $400m |
(c) Indirect tax as percentage (%) of total revenue.
Indirect tax = $420m
Total Revenue - $860m
Therefore % = \(\frac{420}{860}\) x \(\frac{100}{1}\)
= 48.84%
(d) Non-tax revenue includes court fines, road tolls, grants, sales of government assets, licenses, royalties, aids, interest, dividends, rents and profit.
(e) Total revenue is $860 million.
Total expenditure is $1040 million
$860 - $1040 = - $180m
Since the total expenditure exceeds the total revenue, it is a budget deficit.