The following data shows the budget of hypothetical country in2006. 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).
| (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.
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